Cranes buck the trend

March was an unsettled month for the world's March wasstock market, with the an unsettledsharp dip seen at the end of February being followed by a period of volatility. The key issue was, and still is, what is happening with the US economy?

At the moment there is a lot of conflicting information flying around about which way the World largest economy is heading this year. On the one hand problem areas such as the residential construction market are a concern, but the question is whether this is just a part of a it heralds the start of a more drawn-out downturn.

In many ways, a brief respite would be good for the economy, which is clearly slowing from the breakneck growth of the last few years. A pause for breath should lead to lower inflation, giving the Federal Reserve scope to cut interest rates.

But at the moment it is not clear whether the US is looking at a slowdown or a recession, and that uncertainty and negative sentiment is weighing on stock markets around the world. As a result, weeks 8 to 12 this year saw the Dow record a net loss of 1.77%, with lots of ups and downs in between. The FTSE was similar with a 1.48% drop, while the Nikke 225 slumped further with a 3.89% decline.

Against this backdrop, it is impressive, and a little surprising that IC's Share Index for crane manufacturers put on a gain of 0.55%. In addition, the Index hit a record high of 593.94 points at the endof week 12.

The theory about stocks like crane manufacturers is that they are cyclical – climbin g steeply when economies pick up and dropping equally as sharply when they turn down. One would, therefore, ex lar pect the IC Share Index to move in the same direction as the mainstream indicators, but with much bigger swings.

This obviously failed to happen in March, and the resilience of the IC Index was down to gains for Terex and Kobe Steel's share prices. These two companies have the largest capitalisations (the number of shares outstanding multiplied by the share price) of the constituent parts of the sector, and combined they make up about 55% of it. This explains why their small gains were enough to ffset the steeper falls of all the other cranebuilders.

Currencies

Talk of flat interest rates and even the possibility of a cut later in the year saw the Dollar fall against the three other major reserve currencies in March. Its steepest fall – down 2.89% – was aga inst the Yen, with lesser slides against the Pound and Euro. The outlook for interest rates is generally for medium-term rises in the Euro-area, Japan and the UK, against flat or falling rates in the US, so the Dollar could depreciate further in the coming months.