Shares' disastrous quarter

Stock market traders have had a depressing year so far

By the BBC News Online's Jorn Madslien.

The first quarter of 2001 has ended with share prices across the world in the doldrums as investors have been fleeing for cover from the painful effects of an economic slowdown in the US that has been spreading to other regions in the world.

Share price falls during the first three months of 2001

DJIA
Down 9%

Nasdaq
Down 26%

Standard & Poor's 500
Down 13%

FTSE
Down 10.6%

Dow Jones Euro Stoxx 50
Down 12%

On Friday, share traders in the US counted their losses, and this is what they found.

The blue-chip Dow Jones index of leading American companies has suffered its worst first-quarter performance since 1960, ending down 9% at 9,870 points.

And if that sounds bad; consider the even sharper falls seen on the Nasdaq index where the world's leading high-technology firms are listed.

Technology investors have been hit time and time again throughout the first quarter by a string of profit warnings from last year's stock market darlings.

On Friday, the Nasdaq index closed at 1,839 points, 26% lower than where it started the year.

Even the broader Standard & Poor's index of leading shares has ended the quarter sharply lower at 1,158 points, a 13% drop.

Window dressing

Share prices rose across the board on the quarter's last day of trading, but few saw this as a clear sign that the next three months would see a recovery.

"It's the last day of the market quarter, there will be window dressing," said Barry Hyman, chief investment strategist at Weatherly Securities.

"You add to your winners and detract from the losers. The end of the quarter will usually give you some mark-up in your stronger stocks."

But reality will soon return to the markets.

Recession fears remain strong, despite three interest rate cuts in the US during the quarter.

Europe

In Europe, traders spent much of Friday lamenting the European Central Bank's reluctance to cut interest rates on Thursday.

Sectors suffering so far in 2001

Technology
Down 36%

Telecoms
Down 17%

Insurance
Down 19%

Media
Down 13%

Health care
down 6%

Food and beverages
down 6%

Many feel a rate cut would have helped shore up the damage caused by an economic slowdown in the US.

The Dow Jones Euro Stoxx 50 index of leading blue-chip firms within the euro zone fell 12% during the first quarter to 4,185 points, a full 23% lower than its record high a year ago.

In London, the FTSE 100 index of leading shares ended the quarter 10.6% below where it started.

"It's been a second disappointing quarter," said John Hatherly, head of global analysis at M&G Asset Management.

Sectors

Only three of the 18 pan-European Stoxx industry sector indexes rose during the first three months of the year, with technology, telecoms, insurance and media among the worst hit.

And the next quarter offers little hope of a resurgence.

"In the second quarter, we will see continuing volatility in the market, but we'll see some value opening up, even in new economy areas, and in some instances we have seen the bottom," said Mr Hatherly.

In Japan, the Nikkei ended the fiscal year 36% lower amidst recession fears, a tumbling yen, and political turbulence rocking the country.