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Overnight markets
European markets look likely to open up this morning with US markets closing yesterday with the S & P 500 up 0.86% and Asian markets opening strongly today.
Google disappointed with just 3% revenue growth year-on-year in the second quarter, and profits rising largely as a result of cost-cutting. That said, the continued growth in the face of recession confirms a shift towards internet advertising, where Google is the dominant middleman.
Although some expected Google to sustain high growth, that would have implied either high market growth in a cyclical sector during a recession or an implausibly large gain in market share by a company that is already the market leader and under continual competitive pressure from the likes of Yahoo and Microsoft.
IBM’s good growth in the first quarter, together with its improved expectations for the full year is more reason to be optimistic about the outlook for technology sectors.
Most Asian markets continued to gain with the Nikkei up 0.54% (and the yen up against the US dollar), the Hang Seng up 1.42% and the BSE 30 up 1.38%. The only significant sharp decline has been a 1.22% decline in Jakarta in reaction to the bombing of hotels.
In addition, recent movements in commodities prices should be judged in the light of movements in dollar exchange rates — the underlying changes are smaller than the dollar amounts. The exception being the grains and soy beans affected by Chinese announcements of plans to sell some state reserves.
With China continuing to move world markets, it is worth noting RGE Monitor’s comments on China’s apparent return to high growth. This confirms the scepticism expressed in this site’s overnight market’s comments yesterday.
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