Happenings at Wall Street, and the movement in the major indices in the American market often lead to ripple effects engendered, impacting markets internationally outside of its jurisdiction. The big three indices, namely S&P 500, Nasdaq Composite and Dow Jones Industrial Average have always had palpable hold over global markets across seas.
Nevertheless, this past month of April saw the indices with underwhelming, in fact negatively overwhelming numbers. All the aforementioned indices ended the month with an average decline of over 3 per cent. According to reports, this is the worst decline since September 2023.
Nasdaq ended the month being the biggest loser, with a slump of a 3.91 per cent. | Xinhua/Michael Nagle
In the month of the April, first month of the second quarter of the year, saw the Dow Jones decline by a mammoth 3.23 per cent, ending with 37,903.29, losing 1,266.95 points. S&P also observed a decline of 3.60 per cent, as its numbers reduced by 187.42 points, taking its tally to 5,018.39. Finally, the tech-heavy Nasdaq ended the month being the biggest loser, with a slump of a 3.91 per cent or 634.97 points, ending the month at 15,605.48 (1 May 2024).
This is being attributed by many observers to an unexpected rise in inflation numbers over the past months. In fact, the inflation rate has seen a steady rise, as the numbers rose from 2.9 per cent in December 2023 to 3.1 per cent in January. It only surprised analysts more from there, as the inflation rate rose further, to 3.2 per cent in February. Then came the big blow, as the biggest economy on the planet saw its inflation rate shoot up in March, to 3.5 per cent.
According a recent statement, in order to reign in on inflation, the Fed may retain high rates for a while to come. |
This has had an impact on the interest rate policies carried out by the Federal Reserve as well. According a recent statement, in order to reign in on inflation, the Fed may retain high rates for a while to come, making borrowing cumbersome for businesses, and in turn affecting ability of businesses to expand and even operate seamlessly. The sentiment according to some, is being reflected on the equity markets.
Although some other indices around the globe have also observed a slump, developments, across the Atlantic, in London, appear a little different. Despite the Pound Sterling losing its value, and questions being raised over the British Economy at large, the marquee index FTSE 100 gained 211.48 points or 2.67 per cent to reach 8,146.57 (1 May 2024). It even scaled the summit of its all-time high numbers.
India's two main indices Nifty and Sensex also observed similar feats, scaling their respective all-time highs in April. | Image: Wikipedia (Representative)
Meanwhile, India's two main indices Nifty and Sensex also observed similar feats, scaling their respective all-time highs in April. The Sensex was trading at 74,716.70 points, with a monthly gain of 1.10 per cent (2 May 13:22 IST). Meanwhile, Nifty was trading at 22,689.10, with a monthly gain of 1.05 per cent (2 May 13:22 IST)
This, of course will not lead to an exodus of investors from the almighty American markets and all-powerful American corporations. But, it could result in some short-term and subsequent long-term problems to the market, as uncertainty over issues international and domestic increase. The 2024 battle to White House and the eventual result is also another reason, which could drive at least some investors away to safer, stabler markets.
