Strong gains over two consecutive weeks got slowed down last week after the global economy showed signs of shaky days ahead. However, major indexes managed to remain steady owing to some positive US economic data.
The slew of economic measures announced in Europe notwithstanding, European purchasing managers indexes released last week revealed that business activity for Europe was shrinking fast. Southern Europe was particularly in bad shape, along with considerable slowdown in France. Though Germany fared better, it wasn’t enough to restore investor confidence. A survey of manufacturing activity in China showed continued fall in production.
These developments had an impact on commodity prices. Energy stocks fell on Monday as oil prices moved headlong southwards. The fall of production in the manufacturing sector led to the fall of steel prices. On account of the mounting global weakness, FedEx revised its revenue projections, while diversified industrial firm 3M cut back its own targets. However, the fall in commodity prices provided some relief for household budgets, and enhanced corporate earnings in energy intensive industries.
The U.S. economy, however, had some news to cheer. The housing market showed signs of recovery and the weekly jobless figure came down to boost the bulls. Analysts believed the release of Apple’s new iPhone 5 on Friday would provide the necessary fillip to stocks. Pre-orders belied estimates, and propelled Apple stocks above $700 per share. According to S&P 500 Index Apple’s stock now accounts for almost 5% of the market-capitalization.
Last week didn’t bring much cheer to the US currency. The U.S. dollar was weak compared to major currencies.