Nasdaq loses ground

Nasdaq loses ground, but the Dow motors on

The US technology index Nasdaq slipped up toward the end of the trading session on Monday, closing down 0.5%.

But the rest of the world's stock markets, including the blue-chip Dow Jones Industrial Average, managed a brighter start to the trading week.

After gaining over 1% earlier on Monday, Nasdaq finished 10 points lower at 1918.66. The Dow meanwhile gained over 1.9% to close at 9687.53.

US technology shares lost conviction as fears about slowing growth in the sector re-surfaced.

Even bargain hunters decided that tech shares were too expensive for the risk, despite the fact that Nasdaq has fallen 62% in the last year.

Across the Atlantic

Ironically, across the Atlantic, tech shares staged a partial recovery to lift the European markets.

By the close on Monday, London's benchmark FTSE 100 index had pushed 3% higher to 5,576, helped by a 5% rise for the mobile phone company Vodafone and a 3% boost for British Telecom.

The Nikkei built on Friday's 360 point rise

In Paris, the Cac-40 closed 3.5% higher at 5,124 and in Frankfurt the Dax finished over 3% better off at 5726.97.

Japan saw even stronger gains on Monday, with Tokyo's Nikkei 225 index ending nearly 5% higher at 13,862.

Meanwhile Hong Kong's Hang Seng index ended 2% higher at 12853.

It was too early to say whether the gains signified a change in mood as worries continue about the prospects of economic slowdown in the US spreading to the rest of the world.

Cisco warning

Cisco Systems chief executive John Chambers added to the gloom on Monday by suggesting that the US downturn would continue for "at least three more quarters" and possibly longer, in a UK newspaper interview.

We have seen the issues expand to Asia-Pacific and we see the early signs in Europe

John Chambers
Cisco Systems

Mr Chambers told the Financial Times that the outlook for the economy has deteriorated significantly since the internet systems manufacturer, which is seen as a key technology stock, warned in January that it expected the downturn to last for two quarters or more.

"The slowdown that we saw in January is continuing in February and March.

"We have seen the issues expand to Asia-Pacific and we see the early signs in Europe," Mr Chambers said.

Not a bull

Share prices in New York rose on Friday, but they still ended the week below where it started.

"Let's not mistake this for a beginning of a bull market move," said Avatar Associates' Charles White.

Traders describe markets that charge ahead as bull markets, while markets where pessimistic investors turn shy and try to hide are described as bear markets.

Throughout the first quarter of 2001, technology sector companies have been warning investors that their earnings will be lower than they had predicted earlier because the economic slowdown is beginning to bite.

The wave of earnings and profit warnings is expected to gain momentum in the next couple of weeks as the financial year comes to an end.