It’s not at all surprising that the Sensex opened lower today. It would have been naive to assume that after the past two days the market is back on an upward trend. In fact, going by all indications, that “trend” may well be reversed today.
U.S. stocks slumped yesterday, the reason being mixed corporate earnings reports. In fact, it was not just the U.S. but Europe too that felt the heat. Major European markets opened in positive territory on Tuesday, thanks to the overnight rise on Wall Street on Monday. But Britain and Germany ended up closing lower.
Global markets had surged on Monday on signs of momentum behind a second U.S. economic stimulus package and easing credit. But good news was promptly followed by bad news.
China’s weaker-than-expected growth figures added to the negative sentiment. While the Bank of Canada stated that the global economy appears to be heading into a mild recession, led by the U.S. economy which is already in recession.
Meanwhile, the Asian markets are currently being hammered. Stocks in Asian and Pacific markets are trading in negative territory, taking their lead from Wall Street.
Given the persistent uncertainty over the impact of the credit crisis on the global economy and weak macro-economic factors, the equity market will stay volatile.