Courtesy of Doug Short.
Markets around the world rallied last week, or to put it more precisely, rallied in overdrive mode on Friday. France’s CAC 40, the top performer with a weekly gain of 3.42%, had a four-day loss of 1.27% at Thursday’s close. But the outcome of the eurozone summit sent buyers into a frenzy (with some significant short covering, I would imagine), and the index rose an eye-popping 4.75%. The German index exhibited the same behavior — down 1.81% for the week at the outset of Friday’s 4.33% advance.
China’s Shanghai Composite was the odd man out. It lost 1.57% for the week despite its 1.35% gain on Friday. The index is down 35.89% from its interim high in 2009. The signs of slowing economic growth have taken a toll on the Shanghai, and the Chinese Manufacturing PMI, due out later today, will probably influence the Monday’s markets in the People’s Republic.
The table inset in the chart below shows that four of the eight markets are in bear territory — the traditional designation for a 20% decline from an interim high, down from five last week with the German index rising above the bear stigma. In our gang of eight, the S&P 500 remains the closest to an interim new high, down only 4.01% from its April 2nd peak.
As for YTD performance, here is a table showing the 2012 peak percentage gains, sorted in that order, and current YTD gains for the eight indexes. Despite last week’s gains, the gap between 2012 highs and the YTD performance clearly highlights the worldwide volatility in equities so far this year.
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.
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.
