The Rally Slows
Guest post by Doug Short.
The world market rally slowed last week, except for the Nikkei 225, which remained in the top spot with a 3% gain. The indexes of the two eurozone nations, France and Germany, came in a distant second and third, with 1.5% and 1.4% gains, respectively. The S&P 500 beat out the Mumbai SENSEX in a close race for an equally distant fourth place. The UK’s FTSE 100 kept one nostril above water with a 0.1% gain. China sank into the Red Sea, with the Hang Seng down 0.1% and the Shanghai Composite down 2.5%.
Only one of the eight markets in my weekend basket, the Shanghai Composite, is in bear territory — the traditional designation for a 20% decline from an interim high. This is one less than last week, with Nikkei’s strong performance lifting it above this market stigma. See the table inset (lower right) in thechart below. In our gang of eight, the S&P 500 remains the closest to an interim new high, down fractionally a from its April 2nd peak. At the other end, the Shanghai Composite is over 39% off its interim high of August 2009.
As for year-to-date performance, here is a table showing the 2012 peak percentage gains, sorted in that order, and current YTD gains for the eight indexes. The Shanghai continues to hold dubious distinction of being the only index with a YTD loss.
A Closer Look at the Last Four Weeks
The tables below provide a concise overview of performance comparisons over the past four weeks for these eight major indexes. I’ve also included the average for each week so that we can evaluate the performance of a specific index relative to the overall mean and better understand weekly volatility. The colors for each index name help us visualize the comparative performance over time.
The chart below illustrates the comparative performance of World Markets since March 9, 2009. The start date is arbitrary: The S&P 500, CAC 40 and BSE SENSEX hit their lows on March 9th, the Nikkei 225 on March 10th, the DAX on March 6th, the FTSE on March 3rd, the Shanghai Composite on November 4, 2008, and the Hang Seng even earlier on October 27, 2008. However, by aligning on the same day and measuring the percent change, we get a better sense of the relative performance than if we align the lows.
A Longer Look Back
Here is the same chart starting from the turn of 21st century. The relative over-performance of the emerging markets (Shanghai, Mumbai SENSEX, Hang Seng) is readily apparent, especially the SENSEX, but the trend over the past two years has not been their friend (make that three years for the Shanghai).
Check back next weekend for a new update.