How Much Can Happen In A Country At Once?

Today the markets have absolutely nothing to cheer about. Global cues have turned from bad to worse. Economic data is bad, Cyprus is getting worse and quarterly earnings have started showing disappointment. Brought together, global macroeconomic factors have pulled Indian markets down for five consecutive days so far (sixth expected today).

Starting with Cyprus, the crisis-dipped country needs a way to raise 5.8 billion euros so that it has access to 10 billion euros as a rescue package from Euro-zone members. After having considered bank deposits and seeing the repercussions of it, Cyprus officials are now looking at ways to tap pension funds and other assets. At the same time, officials are also said to be in talks with Russia for possible aid.

Moreover, the Central Bank of Cyprus unveiled a proposal to consolidate the country’s banks so as to avoid the second largest lender in the country to go bankrupt. At the same time, Euro-zone ministers said they were ready to discuss the new proposal as soon as they receive it.

Additionally, ratings agency Standard & Poor’s cut the credit rating of Cyprus from CCC+ to CCC with a negative outlook.

All of these factors must have obviously gotten the equity markets in Cyprus to go nuts. In fact, the entire system has been shut. The country’s banks remained closed for business and the stock exchanges extended its trading suspension to include Thursday and Friday. How much can happen in one country at one time?!

But there was more to add to downward pressure to the Euro-zone. Preliminary readings of the manufacturing and services Purchasing Managers’ Index were released yesterday. The data has been indicative of a further slowdown in Europe. These worries seem to be as grave as the uncertainty over Cyprus. Data has been negative across the board and the problems that the zone is facing have been widening by the day. The data was as follows,

Mind you, any reading below 50 marks contraction.

Ohh wait, that’s not it!

Oracle, the technology giant, announced their quarterly earnings in the US. The company posted sales and profits that were below expectations. So bad that they resulted in a decline of approximately 10% in the share prices of Oracle. This dragged technology stocks in general and thus the markets overall.

All of these factors have led to global markets being low. Asia has started off on a weak note as well. The SGX Nifty too was seen trading low, down by 10 points at 07:50 AM. These factors will lead to a negative opening on the Nifty today and probably a sixth day of consecutive falls.