Throughout 2015, globalDynamic (Global) markets were significantly impacted by weak energy prices, crises in Europe and deflation, says Tim Edwards, senior director of Index Investment Strategy at S&P Dow Jones Indices.
On the upside, European Central Bank stimulus in January caused European equities to gain close to 7%. And, he notes, Chinese stocks soared by mid-2015 as a result of the late-2014 launch of the Shanghai-Hong Kong Stock Connect.
Rundown of major events in 2015
- In January, the European Central Bank announced the launch of a major stimulus package. Following that, European equities gained close to 7%, and that gain was retained throughout the year. The policies and statements of the developed world’s central banks remained the key mover of markets and sentiment for the remainder of the year. Read: BoC would consider sub-zero rates in a crisis
- Deflation was, and remains, a major concern, as the U.S. looks set to finally hike rates. Meanwhile, central banks in the U.K., Europe, China and Japan remain committed to only low or negative rates, and to extraordinary measures of economic support. Read: How the target deflation rate affects your life
- Greek drama dominated the headlines for the first part of the year, as the world’s markets swung through a thoroughly European series of crisis and short-term resolutions. A third bailout was finally agreed over the summer, so the Greek government has begun to rebuild its economy.
- Another major story this year was the performance of commodity markets, where the fall in energy prices spread from the high-yield U.S. bond market through to equities. Low oil prices also contributed to the increasing deflationary pressures across the developed world. Read: Don’t let a good oil crisis go to waste
Equities impacted by stimulus: chart
The impact of currency movements was particularly acute in Europe, says Edwards. Throughout the year, double-digit equity returns in euros at times converted to a loss for unhedged U.S.-based investors.
|2015||Local Terms||U.S. Dollar Terms|
|S&P Europe 350||+10.64%||– 0.88%|
|S&P Global 1200||N/A||+0.46%|
Read: 2016 investing preview
A look at global equities
The S&P Global 1200 index has gained by 0.46% this year, adding a meagre $15 billion of market capitalization in global blue-chip equities. Over the same period, the S&P 500 has added a cumulative 1.6% and around $51 billion in market cap.
But, the U.S. market hasn’t been the greatest contributor in relation to the size of its market. Adding to returns far beyond their global weighting, equities in Denmark and Ireland excelled.
Meanwhile, Latin America weighed on global performance; even though companies from Peru, Chile, Brazil and Columbia only comprise 1.3% of the index, they collectively dragged the S&P Global 1200 down 0.3% in aggregate. The worst performance came from the Greek market.
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