And So We End The Fourth Week Of World Markets Decline

The pause in the 2012 worldwide rally continued last week. It was the fourth consecutive week with a negative average performance for the eight indexes in our international collection. Six of the eight posted a negative number, one more than the two previous weeks, but the average loss, to two decimal places, was the same as the week before -1.24. The Shanghai Composite took the top spot for the second consecutive week, and the CAC 40 finished last for the second consecutive week. In fact, it has been the worst performer for three of the last four weeks and next to the bottom when it wasn’t dead last.

Despite the selloff over the past four weeks, the adjacent table of 2012 year-to-date continues to show some strong performance. The Nikkei remains in the top spot, and four of the eight indexes are holding double-digit gains, down from six indexes four weeks ago. And not surprisingly the CAC 40 occupies the YTD cellar.

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 colours for each index name help us visualise 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 per cent 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, Hang Seng) is readily apparent.

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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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