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May 07, 2012, 09.29 AM IST
The US markets finished in a negative territory on Friday, after the government reported that hiring had slowed in April. This fueled worries over the strength of the economic recovery. The S&P 500 and Nasdaq posted their biggest weekly drop this year.
The CBOE volatility index surged to close near 19. For the week, the Dow erased 1.44%, the S&P 500 shed 2.44%, and the Nasdaq dropped 3.68%. Adding to pressure, US futures were down over 1%. On the economic data front, non-farm payrolls in the US rose much less than expected, with employers adding just 115,000 jobs in April, well below expectations. Still, the unemployment rate slipped to 8.1%, hitting the lowest since January 2009. The consumer credit in US is expected to rise to USD 9.8 billion, this would be the key data to watch out for in the US today. The European markets fell sharply on Friday after worse-than-expected jobs data from the United States dealt a fresh blow to recovery expectations. Meanwhile, Francois Hollande defeated Sarkozy to become France’s next president, promising a socialist touch to European debt crisis.However, analysts say that perhaps Greece elections pose a bigger problem for markets than the outcome of the French elections. Listen to the accompanying audio for more details... Greece's two main parties suffered big losses, with anti-austerity parties winning up to 58% of the vote, according to exit polls. This could eventually lead to the EU and IMF halting the rescue funds to Greece taking the debt crisis back to square one. Markets in Asia are trading weak with the Nikkei sliping over 2%. Back home, Sensex fell over 300 points, while the Nifty lost over 100 points on Friday with weak global cues and depreciating rupee playing a spoilsport for the market. Currency corner In the currency space, the euro fell to three months low to the dollar, below 1.30 on concerns over Europe’s fiscal austerity after weekend elections in France and Greece. The Indian rupee hit an intra day low of 53.91 against a dollar on Friday, lowest in last five months. However, it recouped its losses to close the day at 53.47 compared with 53.41 on Thursday. Commodities A sharp sell-off was seen crude prices, Brent crude prices slid over 2% to USD 111 per barrel as a disappointing US jobs report soured economic sentiment and technical triggers intensified selling. Nymex was at USD 96 per barrel. From the precious metals space, gold prices are hovering around USD 1638 dollar per ounce. Domestic cues The Finance Bill will be discussed in Parliament today as the investors are hoping to get some clarity on the General Anti-Avoidance Rule (GAAR), which is expected to pull the market out of its three-month dip. Stocks in news In the earnings action, HDFC would announces its fourth quarter earnings today. According to a CNBC-TV18 poll, the company may see a muted growth in topline and bottomline due to large base effects. Their spreads expected to remain largely stable and asset quality may continue to be strong. SKS Microfinace, Bosch, Jubilant Life, Glaxo Pharma, Glaxo Cons, Andhra Bank, Rolta, Welspun India and Aptech would also be announcing their Q4 earnings today. Meanwhile, the Himachal Pradesh High Court has fined JP Associates Rs 100 crore and has ordered the company to not set-up 62MW captive thermal plant. It is learnt that Germany’s RHI may buy Orient Refractories for Rs 600 crore.
Harsha Jethmalani
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