World Markets Update: The Trend Reverses to the Downside

February 1, 2015

by Doug Short

Only two of eight indexes on my world market watch list posted weekly gains, down from seven the previous week. The average of the eight was -1.21%, a dramatic change from the +3.37% average of the previous week. Japan's Nikkei 225 was the top performer with its 0.93% advance. China's Shanghai Composite was the biggest loser, down 4.22%.

Here is a overlay of the eight for a sense of their comparative performance so far in 2015.

Here is a table of the 2015 data performance, sorted from high to low, along with the interim highs for the eight indexes. Six of the eight indexes are in the green at the end of the first month of the year, with the two Eurozone indexes up dramatically, and India's SENSEX not far behind. The S&P 500 is the outlier at the bottom, down 3.10%.

A Closer Look at the Last Four Weeks

The tables below provide a concise overview of performance comparisons over the past four weeks (through year's end) 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.

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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 and Hang Seng) up to their 2007 peaks is evident, and the SENSEX remains by far the top performer. The Shanghai, in contrast, formed a perfect Eiffel Tower from late 2006 to late 2009.

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Check back next week for a new update.


Note from dshort: I track Germany's DAXK a price-only index, instead of the more familiar DAX index (which includes dividends), for consistency with the other indexes, which do not include dividends.

All the indexes are calculated in their local currencies.

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