For the second year in a row January has turned out to be a month investors would want to forget.
In 2008 the market shed around 7% to 7.2% points between the ASX 200 and the All Ords. This year the market was off around 6.8%.
It was a similar story across the world.
In the US where the economy is shrinking, January was the worst ever for the Dow and the Standard & Poor’s 500, two of the key indices.
The Dow lost 8.8% and the S&P 500 lost 8.6% in the month on fears of the recession, earnings, bank problems and the escalating job losses.
The Dow’s fall was the worst in its 113 year history. It lost 34% last year.
Nasdaq lost 6.4%, but that wasn’t as much as last January’s loss of 9.9%. That 2008 loss was the worst in the tech average’s history, going back to its start back in 1971.
Friday will see a big test for sentiment with the January jobs figures.
Another terrible figure will offset any bullishness from a banking bailout package due this week and possibly the Obama administration’s stimulus package.
After Colgate Palmolive did well in the 4th quarter and seemed to be upbeat about the outlook for 2009, some investors thought the consumer products sector was living up to its usual claim of being a defensive sector to retreat to in tough times.
But the giant consumer product company, Proctor and Gamble proved that wrong: it missed market estimates and the shares fell more than 6% as investors fretted that US consumers were not buying as much as they had thought and that P&G’s offshore businesses were being hurt by the strong US dollar and slowing demand.
Friday saw the S&P 500 fall 2.3% to 825.88 for its fourth straight weekly drop.
The Dow fell 148.15 points, or 1.8%.
That was after they opened higher after the Commerce Department said US gross domestic product contracted at a 3.8% annual rate in the fourth quarter of 2008.
That was less than the 5.5% from the market estimates, but a 1.3% positive contribution from a rise in unsold stocks of goods helped offset a deeper slump across the economy as a whole.
Economists now say the slump will be worse than forecast this quarter because businesses will cut production to allow the unsold stocks to be rundown.
Also helping was the sharp fall in prices in the quarter as oil prices dropped. That also made the GDP numbers look better than they were.
Unadjusted for inflation, GDP shrank at a 4.1% rate, the most since the first three months of 1958.
Bloomberg reported that profits fell 38% for the 208 companies in the S&P 500 that have released fourth-quarter results since January 12.
The December quarter will be the sixth straight period of falling corporate earnings, the longest down streak on record.
Caterpillar dropped again as it upped its sackings by another 2,110 factory workers at three Illinois factories. That means more than 22,000 have gone or are going from this huge global group as the construction and resource sectors fade.
Exxon, the world’s largest company by market value, posted a smaller decline in profit than analysts estimated as increased refining earnings cushioned the impact of a record drop in oil prices.
Chevron Corp, the second-biggest US oil company, posted an unexpected increase in fourth-quarter earnings after margins on refined fuels widened, blunting the impact of a plunge in crude prices.
In Europe shares rose Friday
, cutting the fifth straight monthly decline on the Dow Jones Stoxx 600 Index.
The Dow Jones Stoxx 600 Index added 0.2%, bringing the weekly gain to 4.8%.
It dropped 3.6% last month. That was after 2008’s 46% drop.
London’s Footsie 100 fell 1%, but was up 2.4% for the week, but down 6.4% for the month.
A report said Europe’s inflation rate fell more than economists forecast to 1.1% in January, the lowest since the year the euro was introduced in 2008, but unemployment rose for a fifth month.
The European Central Bank might have to cut rates at its meeting this week, after suggesting last week it might hold off.
In Asia, the MSCI Asia Pacific Index fell 1.6% Friday and extended its January drop to 6.9%.
Up to Friday it had jumped almost 6% in three days as governments around the region moved to increase their help for their economies.
But bad production figures for Japan and South Korea on Friday pushed the index lower. A growing tide of losses and job cuts in Japan also battered sentiment in Tokyo.
The Nikkei fell 3.1% on the day to be down 9.8% over the month, the second worst start to a year on record.
It was up 3.2% over the week, but Friday’s terrible trifecta of falling production, retail spending and employment affected confidence (or what’s left of it).
Markets in South Korea, Singapore, Malaysia and the Philippines dropped; China and Taiwan have been shut all week for the Lunar New Year.
Hong Kong’s Hang Seng index rose on the day and was up 5.6% over the short week of trading.
Markets were closed for the first three days of the week for Lunar New Year holidays. The index shed 7.7% in January, on top of its 48% in 2008.
Among commodities, gold rose, capping a third straight monthly gain, as investors sought an alternative to holding cash. Silver also increased.
Comex April gold futures jumped $US21.90, or 2.4% Friday to $US928.40. It rose 5% in January.
March silver futures climbed 42 USc, or 3.5% to $US12.565 an ounce. The price rose 11% in January, also a third straight monthly gain. It shed 24% in 2008 while gold rose 5.5%.
Copper futures
