A bright corner

The world markets send out mixed signals but there may be more reason for hope

The world markets send out mixed signals but there may be more reason for hope

The last week was a curious one for the world economy as every indicator sent out both negative and positive signals. For investors,this makes things look unpredictable and treacherous,even as,at the beginning of a new week,no new risks can be identified on the global horizon. Instead,there is room for cheer,given that emerging markets like India have begun to show strong positive vibes,while in Europe speculation around Spain is largely positive it is seen to be on course for a bailout,which means it is likely to accept the freezing of pensions and the raising of retirement age. But late on Friday,Germany said it did not think Madrid needed any further support at this point,spooking the currency markets again.

Raising fears about faltering global growth,the World Trade Organisation cut its forecast for the growth of global trade to 2.5 per cent from 3.7 per cent on Friday. The numbers are less than half of the average growth rate of trade seen in the last two decades. But even as analysts worked out the impact,they were surprised to see the US markets soar to levels not seen since December 2007. The S&P 500 index closed out the week 16.1 per cent up from the end of 2011. While some investors would want to believe that the bright trend could persist till the end of the year,others are pointing to the ECBs new plan to provide unlimited support to struggling countries and to the Feds QE3 programme as signs that the recovery is far more fragile than anticipated,which is why it needs such robust support mechanisms.

For the global economy,the signs of stabilisation will be in the third quarter report cards for companies,due from early October,and they will also depend on how the new tensions in the Middle East impact oil prices. Thomson Reuters data shows the outlook for the top 500 companies is at its most negative since 2001,yet that is countered by macro economy numbers for US GDP growth,housing markets and consumer spends,all of which have shed more red than at any time in the recent past. September is still the month that has produced some of the most critical episodes in the world economy since 2008. Not surprisingly,no one is willing to bet that this month might also be the one when the economic order turned the corner.

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Adani group chief Gautam Adani. The regulator made it clear that none of the charges in the show-cause notice could be proved. It also confirmed there was no violation of the Sebi Act concerning fraudulent or unfair trade practices.

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