The Rally Takes A Breather
Doug Short | Sep 28, 2014 01:33AM ET
The broad rally of world indexes on my watch list took a time out last week, with seven of the eight posting losses. China's Shanghai Composite was the sole gainer with a 0.78% weekly advance. Japan's Nikkei 225 was second best for the week at -0.56%. The S&P 500 managed to take 3rd place with a -1.37%. Germany's DAX was the biggest loser, down over 3%.
Winning week aside, the Shanghai Composite remains the only index on the watch list in bear territory -- the traditional designation for a 20% decline from an interim high. The index is down 32.37% from its August 2009 peak. See the table inset (lower right) in the chart below.
Here is a look at 2014 so far.
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 40and BSE Sensex 30 hit their lows on March 9th, the Nikkei 225 on March 10th, the DAX on March 6th, the FTSE 100 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.
Check back next week for a new update.
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