World Markets Update: Rally Suffers Setback (Except For China)
Doug Short | Jul 26, 2015 12:22AM ET
Seven of the eight indexes on our world watch list gave back part of their gains from the previous week. The one positive outlier was the manic-depressive Shanghai Composite, which advanced 2.87% over the past five sessions. The Western indexes fared the worst of our gang of eight. The UK's FTSE 100 was the worst loser and a negative outlier in that its -2.88% decline more than eradicated its gain from the previous week.
Here is an overlay of the eight for a sense of their comparative performance so far in 2015.
Here's an updated look at the Shanghai Composite over the past nine years. Below is a log-scale daily chart illustrating the bubble that peaked in 2007 and the rally that started last year. The plunge from the 2015 peak was astonishingly swift and severe. The rally over the past two weeks week has further boosted hopes the worst is over. The index is now down 21.2% from its April 28 high, which is well off its 32.1% interim low set 12 sessions back on July 8th.
Here is a table of the 2015 data performance, sorted from high to low, along with the interim highs for the eight indexes. All eight indexes are in the green, with China still remaining at the top.
The tables below provide a concise overview of performance comparisons over the past four weeks (through year's end) for these eight major indexes. We'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.
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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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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.
Check back next week for a new update.
Note: We 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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