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World Markets Weekend Review: The Rally Strengthens

Courtesy of Doug Short.

The 2012 worldwide rally reignited last week, with six of the eight indexes in our basket finishing with a weekly gain — the reverse ratio from the previous week. Germany’s DAXK was the top performer with a gain of 4.03%. France’s CAC 40 finished second with a gain of over 3%. The S&P 500 finished in third, but its gain of 2.43% was enough to make it the sole index to set a new interim high. The SENSEX and Shanghai Composite were the two indexes posting weekly losses, with the Shanghai as the biggest loser, down 1.42%.

The adjacent table shows the 2012 year-to-date performance of our gang of eight. At this point six markets are holding double-digit gains at the end of eleven weeks, but the S&P 500 is a new member of the 10% plus club, replacing the Shanghai Composite. But even the worst year-to-date performer, the FTSE 100, is up over 7%.

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, Hang Seng) is readily apparent.

Check back next weekend for a new update.


Note from dshort: At the suggestion of Joerg Willig, a finance professional in Germany, I replaced the DAX index, which includes dividends, with the price-only DAXK, which is consistent with the other indexes.

 

 

 

 


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