Stock markets have plunged nearly everywhere. This was clearly evident during the past few months. Most foreign markets experienced high volatility during this period. Markets tend to magnify unfavourable news, similarly as in the past few years, they have flourished on the back of favourable economic news, especially in the USA. It was particularly true of technology stocks whose value has been more than halved since April 2000. Nasdaq index - laced with the world’s leading high technology firms, closed at 1,839 points at the end of the quarter, 26% lower than where it started the year.

The US Federal Reserve sparked the stock market rally with its fourth interest rate cut this year, aimed at keeping the economy out of recession. The Nasdaq index has risen about a third since hitting its lowest level in more than two years on April 4. But it remains at about 40% of its value of 13 months ago. In the week before Federal Reserve’s third half point cut in interest rates on March 20, as many as 38 of the world’s stock markets fell.

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

Europe’s main stock markets too slowed during the quarter. The Dow Jones Euro Stock 50 index of leading blue chip firms within the Eurozone fell 12% during the first quarter to 4185 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 from where it started.

Asian markets too have been falling in recent times. In Malaysia the stock market has lost almost 10% of its value since the beginning of the year. In Japan the Nikkie Index ended the fiscal year 36% lower. In Bombay, the BSE Sensex index reported a negative growth of 3% during April.

In comparison Colombo’s All Share Price Index ( ASPI) moved down by 1.6% during last month while the Milanka Price Index (MPI) reported a negative growth of 2.4%. The average daily turnover for the month was Rs. 20.7 Mn. as against Rs 20.9 Mn last month.

Thirteen Sector Indices reported losses while three appreciated. Motors (10.6%), Construction & Engineering and Oil Palms (7.5%) Sectors reported noteworthy declines while the Services Sector appreciated by 6%. Foreign investors were net sellers in the market during the month with net sales of Rs 186.5 Mn. The Hotels & Travels Sector accounted for 71% of the total foreign purchases and 79% of the total foreign sales.

At the end of the month, there were 250,631 local individuals, 1,447 foreign individuals, 2,688 local companies and 2,595 foreign companies registered with the Central Depository System of the Colombo Stock Exchange (Colombo Stock Exchange).