World Markets Review: The 2012 Rally Takes A Breather

The 2012 worldwide rally went on hold last week. All eight indexes in our basket finishing with a weekly loss, with the average of the eight at -1.88% — a significant reversal of fortune from the average gain of 1.54% the previous week. The S&P 500 finished in the top spot with a loss of 0.50%, closely followed by the SENSEX at -0.60% with the Nikkei 225 coming in third with at -1.17. At the other end of the spectrum, the Hang Seng and CAC 40 finished with losses greater than 3%, and the DAXK and Shanghai were both down over 2%. The FTSE finished fractionally above the mean at -1.86%.

Despite the selloff, the adjacent table of 2012 year-to-date performance still shows six markets holding onto their double-digit gains at the end of twelve weeks, the same six as last week, although the Nikkei has bumped the DAXK for the top spot. But even the worst year-to-date performer, the FTSE 100, is up over 5%.

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, 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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