Q1 global stock market performance in review

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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%.

The annotated chart below tracks the movements of the Dow Jones Industrial Index during the quarter and comes courtesy of The Wall Street Journal.

Source: The Wall Street Journal, April 1, 2010.

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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