Global Stock Market

Global Stock Market Review: Europe Spoils the Party


Tuesday, January 17th, 2012

Investors last week faced a tug of war between signs of an improving U.S. economy and lingering concerns about Europe’s debt malaise. The Euroland worries moved to center stage on Friday when Standard & Poor’s downgraded the credit ratings of France, Austria, Italy, Spain, Portugal and four other European countries. Also denting sentiment were rumblings out of Greece, suggesting that the recently agreed bailout terms were now in doubt.

After starting off the year better than any other since 2006, the S&P 500 Index had its worst day of the year on Friday, but nevertheless remained in positive territory for the week as a whole.

Trading on stock markets during the second week of 2012 was again characterized by light volume, but it was nevertheless a good week for most risky assets such as stocks, corporate bonds, and precious and industrial metals.

Equities gained ground for the second consecutive week as shown by the performance of the two principal global equity benchmarks: the MSCI World Index closed 0.8% higher and the MSCI Emerging Markets Index surged by 2.8%. In a clear reversal of last year’s pattern, emerging markets have so far this year outperformed developed markets by a factor of 2.5.

Click on the table below for a larger image.

On the issue of mature versus emerging markets, well-known investor Marc Faber said: “What we had in 2008 was the outperformance of the U.S. and emerging economies’ stock markets and commodity markets got hit very hard, but it lead to a major low in emerging stock markets that bottomed out between October 2008 and March 2009. After that emerging stock markets outperformed the U.S. until the end of 2010. So I think we may get a similar picture. I read all the strategies that say we should invest in the U.S. I say maybe that’s correct for the next three months or so but I would rather be looking at an entry point in emerging markets over the next six to nine months.”

As far as the U.S. is concerned, all the benchmark indices ended the week in positive territory, with the S&P 500 and the Dow Jones Industrial Average gaining 0.9% and 0.5% respectively. But the real star was the Russell 2000 Index that improved by 1.9%. This is a good sign for the overall market as outperformance by small caps is normally associated with rising markets.

Al the U.S. indices are also higher for the year to date, ranging from +1.7% to +4.1% – in the case of the tech-heavy Nasdaq Composite Index.

When one considers the 10 economic sectors of the S&P 500 Index, it is clear that the cyclical sectors were the stronger ones over the past few days. These are sectors such as Materials (+3.9%), Financials (+3.1%) and Industrials (+2.6%). Not shown, Homebuilders (+7.5) surged on the back of Lennar reporting a solid increase in new orders. The lagging sectors were the defensive ones such as Utilities (-0.4%) and Consumer Staples (-0.3%). Energy also fared badly and was down by 1.4%. This pattern of cyclical sectors outperforming defensive sectors is what one would expect in the bull phase of a stock market.

Source: U.S. Global Investors – Investor Alert

Moving beyond the U.S., most stock markets ended the second week of the year in the black. Among mature markets, strong performers included Singapore (+2.8%), Australia (+2.2%), France (+1.9% – notwithstanding the country’s credit rating cut) and, surprisingly, Spain (+1.9%). In the emerging markets category China at long last rebounded, closing 3.7% higher. Also performing well were Hong Kong (+3.3%) and Brazil (+2.3%). The notable downmarkets included Portugal, New Zealand, Holland and the U.K.

Prior to last week’s improvement, the Shanghai Stock Exchange Index dropped by more than 30% from its high of August 2010. The trigger for the turnaround was Chinese bank loans and M2 money supply both rising more than expected as Chinese officials started taking action to stimulate the economy. Chinese equities look attractive from a valuation point of view and it would seem that investor concerns about slowing economic growth and a further shake-out in the property market have already been discounted by stock prices.

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Global Stock Market Moving Averages: Tide Lifts Some Boats More than Others


Thursday, January 12th, 2012

I often use the 50-day moving average as an indicator of the secondary trend of a stock market, and the 200-day moving average as an indicator of the key primary trend. Specifically, one would like to see a stock market index trading above both these measure, but importantly above the longer-term 200 day line.

I have analyzed the numbers using yesterday’s closing levels, and the following are a few key observations:

  • The global stock market rally since the third week of December has pushed most benchmark indices above their 50-day moving averages. Among the bigger markets, Japan and China are notable exceptions.
  • Notwithstanding the rally, most markets are still trading below their 200-day averages.
  • However, there are a few exceptions. Among mature markets, these include Ireland, U.S., U.K., Switzerland and Denmark.
  • As far as emerging markets go, the ones trading above the 200-day averages are: the Philippines (that has just made an all-time high), Venezuela, South Africa, Mexico, Indonesia, Thailand and Brazil.
  • Some of the worst performing mature markets, according to the 200-day lines, are debt-ridden countries such as Greece, Portugal and Spain, but Japan, New Zealand and Austria are also lagging.
  • The emerging markets lagging the 200-day averages by most include Pakistan, Sri Lanka, Turkey, China, the Czech Republic and India.

The tables below show the detail, with stock markets ranked from those trading the furthest below their moving averages to the ones that are the furthest above the averages.

Developed markets: ranked according to 50-day moving average

Developed markets: ranked according to 200-day moving average

Emerging markets: ranked according to 50-day moving average

Emerging markets: ranked according to 200-day moving average

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Global stock market moving averages – a mixed picture


Wednesday, October 12th, 2011

A quick whizz around the moving averages of global stock markets makes for interesting reading. Specifically, I have considered the standard deviation from the 50- and 200-day moving averages for both mature and emerging stock market indices.

As shown in the tables below, the key conclusions are as follows:

  • Most developed markets are again trading above their 50-day moving averages (indicating the secondary trend), including the MSCI World Index and all the major U.S. indices. It is not surprising to see markets such as Greece and Portugal bucking the trend, with Japan also an underperformer.
  • The recovery of emerging markets is lagging that of the developed ones, and most of these markets are still below their 50-day averages. Pakistan, South Africa, Turkey and Venezuela are notable exceptions.
  • Considering the 200-day moving averages (an indicator of the primary trend), all the developed markets with the exception of New Zealand are below their averages, with Austria, Greece and Singapore more than two standard deviations in the red.
  • As far as emerging markets go, only two – Pakistan and Venezuela – are above their 200-day averages. The MSCI Emerging Markets Index, as well as three of the BRIC countries – China, Brazil and Russia – is more than two standard deviations under water.

I would not be surprised to see a further recovery in stock markets over the next few weeks, with those markets most deeply oversold relative to their 200-day moving averages offering the strongest recovery potential. But until we see the majority of the indices (as well as the majority of individual stocks) breaching their 200-day lines, one would be hard-pressed to talk of a resumption of the bull market.

Developed markets – ranked by standard deviation from 50-day moving average


Emerging markets – ranked by standard deviation from 50-day moving average


Developed markets – ranked by standard deviation from 200-day moving average


Developed markets – ranked by standard deviation from 50-day moving averages


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Marketwatch Talks with Gary Shilling


Sunday, August 21st, 2011

via Trader Mark, Fund My Mutual Fund

While Gary Shilling is less of a trader, and more of a macro guy his long term views continue to be more ‘right’ then ‘wrong’ although he has suffered through some market action that has gone against him as never seen before levels of government and central bank intervention created a hazy shade of steroid injections globally.  But such calls as remaining long U.S. bonds, ultimately, have been proven correct.  Ironically he has a 180 degree different view on US Treasuries (and stocks) than Faber.  I share some views with both at this moment…

Marketwatch likewise has ’5 moves’ Shilling is offering for investors.

  • Stock investors are suffering as shocked markets grapple with the grim prospect of another U.S. economic recession, but anyone paying attention to economist A. Gary Shilling can say he saw this coming.  Shilling is president of economic consulting firm A. Gary Shilling & Co. and author of the recently published “The Age of Deleveraging: Investment Strategies for a Decade of Slow Growth.”
  • He’s long predicted that the Federal Reserve’s efforts to stimulate the U.S. economy would fall short, and that a global stock market fueled by cheap money and a government-engineered bailout would come to no good end.  For Shilling, the U.S. economy sliding into recession within 12 months is a matter of when, not if. “Recession is more likely than not,” Shilling said.
  • It wouldn’t take much for a vulnerable economy to slide into recession, he added. That shove could come from “another big nosedive” in the fragile housing sector, Shilling said — sending average home values down as much as 20%. “We going to see a pickup in foreclosures and a lot more houses dumped on the market,” he added. In fact, the economy could be in recession now, Shilling noted.
  • Shilling guesses that official quarterly U.S. growth figures will be revised downward in coming months. Said Shilling: “The odds are that next time they revise the data it will be to make it even weaker. We could be looking at numbers that are positive but may not be six months from now.”
  • The major drag on economic growth is consumer debt, Shilling said. There’s just too much of it — the detritus from years of easy borrowing that Shilling expects will take the better part of this decade to unwind. Accordingly, constrained consumer spending and higher household savings makes a Japan-style deflation — declining prices for many goods and services — a more likely scenario for the U.S. in Shilling’s view than inflation.
  • Investing in such a slow- or no-growth environment requires what amounts to a full reversal from recent years. Defensive, capital preservation takes precedence over risk-taking. Bonds — especially Treasurys — rule. Cash is not trash, but home ownership is. Commodities and emerging markets take a big hit. And stock investors pile into the biggest, strongest and richest corporate boats.
  • “The economies of the world are slipping,” Shilling said. “We are going through this deleveraging process and its going to dominate. The attempts by governments to overrule it are simply insufficient.”

With that in mind, Shilling advises investors to take these steps:

1. Buy Treasury bonds

  • Economic weakness and the unlikely chance of another Federal Reserve stimulus has investors flocking to safe havens, and U.S. Treasury bonds are still considered safest of all.
  • Treasury prices are rallying and yields are falling as a result, and Shilling expects that to continue. He’s even comfortable with the riskier long end of the Treasury curve, where investors can make more money as yields decline.
  • “We like the 30-year [Treasury],” Shilling said. “You get a lot more bang for buck with a decline in interest rates.” For example, if the 30-year bond yield moves to 3% from 4%, an investor stands to pocket a 19% total return, Shilling said.
  • Of course, Treasury buyers can easily get whipsawed if interest rates march higher, but Shilling is confident that won’t happen anytime soon, especially with the U.S. government now more focused on austerity than stimulus.
  • “The Fed and the government are pretty much out of ammunition,” Shilling said. “The Fed has tried the printing press — $1.6 trillion in excess reserves and what’s happened? It’s just sitting there. It’s up to the banks and credit worthy borrowers to turn those reserves into money and they haven’t been. It’s the classic pushing on a string.”

2. Bank on the U.S. dollar

  • Continuing along the safe haven path brings Shilling to a bullish stance on the much-maligned U.S. dollar.  It’s a controversial call, but Shilling contends that among the world’s major currencies, the dollar is “the best of a bad lot.”
  • Of course the weak U.S. economy is problematic for the dollar, but the outlook for the eurozone is worse, Shilling said. He predicts the euro will crack, tumbling to 1.20 to the dollar from about 1.41 now.

3. Bet against commodities

  • Not surprisingly, Shilling is bearish on commodities. “It’s a market not priced for realities,” he said.  Commodity bulls may call the slump in energy and agriculture prices a midcourse correction and contend that China’s continued growth will buoy these markets. Shilling said that line of thinking reminds him of Wile E. Coyote in the Road Runner cartoons, who doesn’t realize he’s run off a cliff until it’s too late.
  • “The fundamental argument for the commodity bubble, and it is a bubble because so many non-commodity users are involved, is that China is going to buy like there’s no end in sight and continue to do so,” Shilling said.  But a global recession and miserly U.S. consumers will take a toll on China’s economy. As China’s growth declines, Shilling said, so will its appetite for commodities.

4. Bet against stocks

  • When the best offense is a good defense, stock buyers look to companies that pay above-average dividends and operate in sectors that can withstand the worst. Traditional areas include utilities, health care, consumer staples.
  • Stocks that Shilling said he’d avoid, meanwhile, include shares of homebuilders, automakers and others in the consumer discretionary sector, and banking companies under pressure to delever their balance sheets.
  • Shilling recommends being short the Standard & Poor’s 500-stock index SPX -1.50% and other broad market bellwethers, along with China stocks and housing-related shares — areas of the market that are overpriced given the heightened prospect for another recession.

5. Sell your house

  • U.S. housing prices are likely to lose another 20% over the next couple of years, Shilling said. There’s still a huge oversupply of available housing, he added, and a 20% decline would simply bring values in line with their long-term historical trend — and 45% below their 2006 peak.  “Sell your house or second home or investment housing property,” Shilling said.
  • Commercial real estate holds more promise, in contrast. “I like rental apartments and medical office buildings,” Shilling said. “A lot of people cant qualify for mortgages, so they end up in rentals. And house prices can and do fall. A place to live and a great investment are no longer combined in a single family house. Younger families say let’s stay in a rental.”
  • The aging population and the new health-care law boosts demand for medical office space, Shilling added. Plus, he noted that more physicians are moving out of storefront, street-level space and into office buildings. “This is a growth area,” he said.
  • One of the few remaining, it seems. The U.S. economic recovery since early 2009 has been two-tiered, Shilling said. Wealthier Americans with stock portfolios enjoyed a rebound, but everyone else felt like the recession hadn’t ended.
  • What’s changed, Shilling added, is that “the guys at the top” have been affected. “A lot of the people on the top that dominate the security markets talked about a ‘soft patch’” for the economy,” Shilling said. “To them, this was all temporary.”
  • Now, he said, “the areas that made people all this money and gave them confidence that all this was a soft spot have gone against them.”
  • The tide has turned, and markets are only beginning to realize it, Shilling points out. As more investors come to terms with this new era of debt-shedding and frugality, money will flow to investments -— mostly defensive ones — that can benefit. It won’t be a pretty transition, but, Shilling said, “There isn’t much you can really do. You just have to wait for this whole thing to work itself out.”

Copyright © Fund My Mutual Fund

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100 Years of Shifting Growth


Wednesday, April 6th, 2011

As part of our research, we track the fiscal and monetary policies of countries around the world. We believe government policies are a precursor to change and that this change can lead to economic devastation, such as the nationalization of oil companies in Venezuela, or generate substantial growth, such as Colombia’s successful efforts to encourage foreign investment.

Historical context allows us to gauge the outcome of these situations. For example, these pie charts from Credit Suisse show the relative sizes of the world stock markets from two very different periods.

World Stock Markets 1899 and 2010

In 1899, London was the world’s leading financial center, and the U.K. made up 30 percent of the global stock market. The U.S. ranked second with just under 20 percent but was gaining momentum. Other European countries held significant market caps, namely France and Germany with 14 and 7 percent, respectively.

Over the next 100 years, power shifted west as the expense of two world wars took its toll on Europe. The U.S., which boasted a booming manufacturing industry and the vast resources needed to fuel it, doubled its market cap to 41 percent of the world’s total by 2010.

The U.S. wasn’t the only one to double in size: Japan’s stock market grew from 4 percent to 8 percent over the same period. Today the financial centers of New York and Tokyo are larger than London’s.

What’s notable is that the 19 countries covered in 1899 represented 89 percent of the global stock market; now the same 19 only account for 83 percent. In the meantime, the “Other” category has quadrupled in relative size. While not defined, as we traveled to more than 30 countries in recent years, we surmise that the “Others” would not be in the developed nations of the world, but located in emerging markets.

China has embraced capitalism, Brazil has implemented solid policies, India has ushered in a growing middle class. We think these developing countries resemble the U.S. in its infancy and offer tremendous potential for investors over the next 100 years.

Read some observations we’ve made from the road ’

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Energy and Natural Resources Market Diary (August 9, 2010)


Monday, August 9th, 2010

Energy and Natural Resources Market Diary (August 9, 2010)
Seaborne Coal

Strengths

  • Wheat prices continue to climb higher with the September futures price, trading up to $7.85 per bushel, the highest level in 23 months. The price of wheat has rallied as a heat wave in Russia, dry weather in Kazakhstan, Ukraine and the EU; and flooding in Canada has damaged crops.
  • The price of crude oil closed above $80 a barrel this week for the first time since early May on improved sentiment for global growth.
  • AK Steel announced they are raising prices for carbon steel products by $40/ton effective immediately. The company cited increased demand for carbon steel products and higher costs as the reason for the price increase.
  • According to McCloskey, Colombia’s steam coal exports in the first half of 2010 hit 34.02m tons, up 3.04m tons from 30.98m tons in the same period last year.

Weaknesses

  • Metal Bulletin reports that the China Iron & Steel Association (CISA) said that steel producers in China will have to cut production in the second half of this year on the back of an oversupply situation.
  • China, the biggest driver for global commodity demand, said its manufacturing grew at the slowest pace in 17 months in July as the government clamped down on property speculation and investment in energy-intensive and polluting factories. The Purchasing Managers’ Index fell to 51.2 from 52.1 in June, according to the Federation of Logistics and Purchasing.

Opportunities

  • Rio Tinto said Tuesday that it would invest a further $790 million to expand the annual capacity of its iron ore operations in the Pilbara region of Western Australia to 330 million metric tons by 2016 from the current capacity of less than 225 million metric tons.
  • China’s equity rally over the last few weeks could be a positive leading indicator for global stock market; China has appeared to reach inflection points prior to other global markets going back several years, according to Bloomberg.

Threats

According to Bloomberg, Codelco, the world’s biggest copper producer, suggested that copper demand in China is likely to decline in the second half of the year due to government actions to tighten lending and control inflation.

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Indian Economy Poised for Double-Digit Growth


Tuesday, June 22nd, 2010

This article is a guest contribution from American Century Investments.

June 14, 2010

Home Guard guiding traffic with the Mumbai PoliceLast week India’s finance minister Pranab Mukherjee announced that his country’s economy was poised to enter into a double-digit growth path in the near future. With normal monsoons (needed for agriculture) and an industrial recovery gaining momentum, India’s gross domestic product (GDP) is likely to increase by 9% this year.

In his address to the 102nd Annual General Meeting of the Indian Merchants’ Chamber (IMC), Mukherjee said other positive factors also bode well for the economy. He also noted that Indian exports started picking up from November 2009 and infrastructure services, including rail freight, transport, power, telecommunications and civil aviation, have shown a visible positive change in 2009-10.

Mukherjee added that favorable capital market conditions with influx of capital flows and improved business sentiment are also very encouraging. In addition, factors such as expected demographic dividend, high rates of saving and investment, depth of the domestic market and the increasing presence of Indian corporations in the global market brighten the growth prospects of the economy in the medium to long run.

Since the country’s national elections in 2004, India had a multi-year bull market leading up to the global economic crisis of 2008-09. In the course of 2007, its economy started to get overheated and the central bank put on the brakes pretty aggressively after the Bombay Stock Exchange (BSE-SENSEX) Index peaked out at around 20,500 in January 2008. This caused a significant sell-off, which was exacerbated by the global economic crisis in the second half of 2008. In concert with the global stock market recovery in March 2009, India’s stock market started its own recovery (see chart below). So, the sharp drop in the country’s stock market was not solely attributed to the global slowdown as much as the government reining in growth and inflation. Even though the Indian economy certainly took a hit, GDP growth never dipped below 4% in any quarter during the 2008-09 time frame.

Bombay Stock Exchange SENSEX

India’s recently released Medium Term Fiscal Policy Statement 2010-11 projects that the fiscal deficit will decline to 4.8% of GDP in 2011-12 and further to 4.1% in 2012-13.

One of the main reasons India fared better during the crisis compared to other emerging market and developed countries is the fact that its economy is mainly fueled by domestic consumption and not exports. For example, agriculture represents about 18% of its economic output and supports 600 million people. By comparison, agriculture represents about 1% of the economy in the U.S. Sound macro fundamentals and stimulus measures helped India weather the global financial crisis. And unlike the U.S. and other developed countries, consumers in India did not take on the huge amount of debt and its financial institutions did not have exposure to toxic assets such as subprime mortgages. It was also insulated from the problems of the developed world by years of conservative fiscal policy resulting in higher savings rates, increases in business and infrastructure investment, a strong domestic economy and job creation.

With more than one billion people, India is the second most populous country in the world after China. Like China, India has a very large rural population, which represents a reservoir of economic growth for years to come. In fact, economic growth in India’s rural areas is about 10% compared to 6% growth in urban centers. From an investment point of view, what makes India attractive is its domestic consumption-driven economy. There is a lot of growth potential in terms of domestic consumption because many people in the rural areas of India are purchasing mobile telephones and other household goods and appliances for the very first time. Another key point is that wealth is trickling down to the rural population. More and more, India’s economic growth is becoming less reliant on demand from developed countries and being driven by an emergent consumer class with buying power.

India was not severely impacted by the global economic recession and the country is projected to grow rapidly over the next decade. For investors, we believe a consumer-based Indian economy holds positive implications because many global companies view potential Indian demand as a ticket to future growth. Indeed, the country’s economy is one of the biggest and fastest growing consumer populations in the world. Nevertheless, India’s growth may by tempered by the government’s inability to keep building infrastructure and power generation and tackle core problems in education, land reform, corruption and social reform.

Copyright (c) American Century Investments®

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Rosenberg – 12 things that could upset the stock market apple cart


Wednesday, April 28th, 2010

By now we know David Rosenberg, Chief Economist and Strategist of Gluskin Sheff & Associates, missed out on the global stock market rally and remains firmly in the equity bear camp. With stock markets coming off the boil, maybe Rosie’s moment has arrived. It is therefore opportune to focus on his list of the dirty dozen of factors that could upset the stock market apple cart.

1.  Wildly bullish sentiment readings. The latest Investors Intelligence survey is now up to 53.3% for the bulls (versus 51.1% the previous reporting week) while the bear camp has dwindled further, to 17.4% (versus 18.9% a week ago). Bullish sentiment rose for the third consecutive week and bearish sentiment has not been this low since January 12. As Bob Farrell’s Rule number 9 stipulates, when all the forecasts and experts agree, something else is bound to happen.

2.  Uncertainty over the coming U.S. midterm elections in November.

3.  A more hawkish Fed (futures pricing in 40% odds of a rate hike by the November meeting).

4.  Tougher profit comparisons in the coming quarters.

5.  The fading of the fiscal and monetary stimulus. The tax credits expire on Friday, the Fed has already stopped buying mortgage bonds, and the pace of new trial modifications under the Treasury’s Home Affordable Modification Program has begun to slow.

6.  Fresh uncertainty surrounding banking industry regulation. Goldman is likely the thin edge of the wedge. A proposal is gaining ground on Capitol Hill to force banks to spin off their derivatives-trading operations, which would represent a severe blow to one of Wall Street’s most profitable businesses.

7.  Higher tax rates to pay for the massive $1.4 trillion federal budget deficit. The Bush cuts that lowered taxes on high-wage earners, capital gains and dividends are set to expire at the end of 2010. The top marginal tax rate will jump to 39.6% from 35.0%, and the current 15% rate on capital gains and dividends will go back to 20.0% and 39.6%, respectively.

8.  Huge overhang of unsold houses. As of March, banks and investment trusts had an inventory of about 1.1 million foreclosed homes, up 20% from a year earlier, according to estimates from LPS Applied Analytics. Another 4.8 million mortgage holders were at least 60 days behind on their payments or in the foreclosure process, meaning their homes were well on their way to the inventory pile. That “shadow inventory” was up 30% from a year earlier.

9. Sovereign debt problems in Greece and spillover to Portugal and possibly Spain.

10. Ongoing commercial real estate trouble, which have resulted in 55 bank failures this year.

11. Underfunded state pension plans.

12. A property bubble in China – the government is now considering introducing new or higher taxes on real estate, possibly a property tax, in order to cool down a booming property market now widely being described as a bubble (prices up well over 10% from a year ago).

Source: Gluskin Sheff & Associates – Breakfast with Dave, April 27, 2010.

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Q1 Global Stock Market Performance in Review


Thursday, April 1st, 2010

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Sitting a stone’s throw from the turquoise Caribbean sea in Santo Domingo (see Gone A.W.O.L – lite blogging and full planes), I nevertheless managed to compile a summary of the movements of major global stock markets for the past quarter and various other measurement periods.

It is 3 o’clock in the morning in this neck of the woods as I battle the time difference to catch up with my office in Cape Town (where it is 9:00). My comments will therefore be brief.

Benchmark indices such as the S&P 500 Index recorded the best quarter since 1998 on the back of improved sentiment as the global economy turning the corner emboldened investors to adopt more risk. For the quarter, the MSCI World Index gained 2.7% and the MSCI Emerging Markets Index 2.1%.

The major US indices, now up for four consecutive quarters, outperformed the broad global indices with both the Dow Jones Industrial Index and the S&P 500 Index returning almost 5%. Running even harder, the small-cap Russell 2000 Index – the leading US index since the lows of March 2009 – gained 8.5%.

In stark contrast with most other stock markets, the Shanghai Composite Index was under water for the quarter with a loss of 6.7%. This underperformance (also seen in a decline of 3.0% in the Hong Kong Hang Seng Index) is noteworthy as Chinese stocks led global markets higher at the bottom and raises concerns that the same could be happening on the way down.

Notwithstanding the excellent quarter and solid rally since the March lows, only the Chile Stock Market General Index and the Mexico Bolsa Index have been able to reclaim their 2007 pre-crisis peaks and are now respectively trading 7.5% and 1.3% higher. Israel could be the next country to eliminate its bear market losses. The Dow Jones Industrial Index and the S&P 500 Index still need to rise 30.5% and 33.8% respectively to reach their October 2007 bull market peaks.

Click here or on the table below for a larger image.

According to Emerginvest, top performers among the entire spectrum of stock markets this week were Estonia (+44.7%), Kenya (+26.0%), Bangladesh (+25.6%), Lithuania (+22.7%) and Nigeria (+22.4%). At the bottom end of the performance rankings, countries included Bermuda (-32.2%), Nepal (-11.8%), Slovakia (-8.2%), Cyprus (-7.8%) and Spain (-7.6%).

A handy visual quarterly review is also provided by Brain Shannon (Alphatrends.net). Please click on the image below to hear his thoughts.

Source: Alphatrends.net, March 31, 2010.

Although it was a strong quarter for most stock markets, the closing day was less rosy. Time will tell whether this is a precursor of weaker performance ahead as we enter April – the last month of the so-called “best six months of the year” before the start of the traditionally weaker May–October period.

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Roundup of global stock market performances (April 22–26)


Sunday, March 28th, 2010

In the absence of the usual weekly “Words from the Wise” review (see Gone A.W.O.L – to Uruguay and San Diego), I this week just provide a summary of the movements of major global stock markets for the past week and various other measurement periods.

With sovereign debt concerns taking center stage, the cyclical bull market that commenced on March 9, 2009 showed some hesitancy during the past week. Performances were mixed as seen from the MSCI World Index gaining a meager 0.2% and the MSCI Emerging Markets Index losing 0.5%.

Among mature markets, Japan recorded a seven-week winning streak and marched to an 18-month peak, benefitting from the weaker yen that boosted exporters.

Emerging markets were mixed with China (-0.3), Hong Kong (-1.5%), Brazil (-0.2%) and Russia (-0.6%) all ending in the red. Emerging markets (+0.4%) have underperformed mature markets (+2.1%) since the beginning of the year, and raises the question whether these markets (and notably China) could lead global markets down in the same way that emerging markets were the first ones to turn higher at the start of the nascent bull market. The Shanghai Composite Index is also the only major index trading below its key 200-day moving average, albeit by only 13 points.

Notwithstanding the huge rally since the March lows, only the Chile Stock Market General Index and the Mexico Bolsa Index have been able to reclaim their 2007 pre-crisis peaks and are now respectively trading 7.1% and 0.9% higher. Israel could be the next country to eliminate its bear market losses. The Dow Jones Industrial Index and the S&P 500 Index still need to rise 30.5% and 34.2% respectively to reach their October 2007 bull market peaks.

Among the major US indices, the Dow Jones Transportation Index (-0.8%) ended the week under water. The Dow Jones Industrial Index, S&P 500 Index and Nasdaq Composite Index registered a fourth consecutive week of gains, although only just.

Click here or on the table below for a larger image.

Top performers among the entire spectrum of stock markets this week were Turkey (+6.6%), Tanzania (+6.1%), Ukraine (+4.9%), Uganda (+4.8%) and Bangladesh (+3.8%). At the bottom end of the performance rankings, countries included Bermuda (-8.6%), Nepal (-2.8%), Cyprus (-2.8%), Jordan (-2.7%) and Vietnam (-2.1%).

Of the 96 stock markets I keep on my radar screen, 63% (last week 64%) recorded gains, 34% (33%) showed losses and 3% (3%) remained unchanged. The performance map below tells the past week’s mostly bullish story.

Emerginvest world markets heat map

Source: Emerginvest (Click here to access a complete list of global stock market movements.)

The performance of the economic sectors of the S&P 500 ended mixed for the week, with six sectors closing higher and four lower. Consumer Discretionary (+2.4%) and Financials (+2.1%) led the pack and Energy (-1.9%), Utilities (-1.7%) and Health Care (-1.1%) formed the rear guard.

Source: US Global Investors – Weekly Investor Alert, March 26, 2010.

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