Developed markets rose for a third week, although average gains slowed to about 0.8%,
versus over 1.7% in each of the previous two weeks. Nineteen of 23 markets gained, led by
Portugal, France, Italy, and Ireland, which gained at least 2% each. The four markets that
fell, including Japan and Australia, each fell by less than 1%.
Author: Kenley Scott
Kenley Scott is a senior equity analyst and sector strategist covering the APAC region and the Energy sector. He is a member of the Global Focus List Committee, which approves all equity recommendations for developed, emerging, and frontier markets. Kenley also writes the Global Sector Summary, part of the Sector Strategy service, which identifies emerging sector strength and weakness across 46 countries every week. After working as a commodities broker, Kenley joined the firm in July 2006. He has a B.S. in Statistics from the University of California, Riverside and also holds a Series 65 securities license.
Global Markets Back Up Strong Gains
Following last week’s 1.8% gain, developed markets continued to rally, gaining an average of 1.7% for the week. All 22 developed markets ended the week higher. The strongest moves were seen among weaker European markets, which were mostly in oversold situations. Portugal (3.3%), Finland (3.1%), Germany (3.0%), and Spain (2.8%) led the week in gains. Singapore (+.4%), Hong Kong (+.6%), and Israel (+.1%) were the weakest performers.
Europe Recovers, Emerging Lead Continues, Financials Improve
Developed markets saw a strong rebound following two weeks of selling pressure, with all 22
developed markets ending the week higher, gaining an average of 1.8%. The strongest market
this week was Japan, which climbed 3.7%, followed by Ireland, which gained 3.5%. Hong Kong
continues to look strong, finishing the week up by 2.6%. European markets continue to lag, with
indices in Germany (+1.1%) and France (+.9%) barely seeing any recovery, following news that
tensions in the Ukraine are escalating.
Frontier Markets Avoid Global Distribution
All 22 developed markets ended the week with losses, declining by an average of 2.2%. European markets continued to see the most selling pressure, falling about 2.5%. Indices in Portugal (-6.2%), Italy (-5.5%), Spain (-3.4%), and Norway (-2.4%) were among the worst-performing markets this week. The best-performing markets were Hong Kong, Canada, and Israel; however, all three did end the week with losses.
U.S. Q2 2014 Earnings Update
About 360 stocks from the S&P 500 have reported earnings for Q2 2014, or their most recent
quarter. This includes about 40 irregular fiscal year-end reports.
Median sales and EPS growth are 5% and 11%, year-over-year, respectively. This is the same
median sales growth and slightly higher EPS (up from 9%), compared with Q1 2014.
If rates hold at this level, sales growth would be tied for the highest since Q1 2012, and EPS
would be the highest since Q4 2011.
Emerging Markets Continue to Lead, Developed Recovers
Developed markets finished the week higher, gaining 1.4% on average, with 22 of the 23 developed
markets ending the week with gains. Israel was the only market that ended the week with losses, falling by
0.4%. European markets advanced, with strong rebounds in Portugal (+4.3%), Spain (+3.6%), and Italy
(+2.0%). Norway continues to look strong, gaining +1.5%. Denmark (+1.5%), the U.K. (+0.9%), France
(+0.8%), and Germany (+0.2%) moved higher as well. Asian markets continue to look constructive, with
the Hang Seng index gaining 3.2% and Japan’s Nikkei gaining 1.6%.
Emerging Market’s Outperformance Widens
Developed markets finished the week with gains of about 50 basis points. However, many countries remain under pressure and continue to accumulate distribution days. Markets gave back some of their gains due to renewed tensions between the U.S. and Russia. Israel (2.2%), Finland (2.1%), Sweden (1.7%), and Belgium (1.17%) gained the most for the week, while the rest advanced less than 1%. The U.K. and Germany advanced 0.6% and 0.3%, respectively. France, Japan, Spain, and Austria ended the week with mild losses.
Most Global Markets Under Distribution, SE Asia Under Accumulation
Developed markets were under pressure this week, as 21 of 22 markets saw broad-based selling, declining an average of 2.6% for the week. Indices across Europe took the brunt of the selloff, with 16 markets falling by an average of 3.4%. Developed Asian markets fared significantly better, falling by an average of only 0.5%, while Canada and Australia ended the week down 0.6% and 0.5%, respectively. Singapore, which gained 0.6%, was the only market to end the week with gains. Following a few weeks of accumulating distribution days, Italy and France are now in correction, while Germany and most of the rest of Europe are under pressure. Worst-performing markets this week were Portugal (-9.4%), Italy (-4.4%), Spain (-4.2%), Austria (-3.6%), Germany (-3.6%), and France (-3.5%).
Most Markets Rise, Emerging Stocks Show Better Accumulation
Over the trailing five-day period through Thursday, developed markets rallied 1.5% on average,
following last week’s 1.5% decline. All 23 markets ended with gains. Outpacing the average were
Italy, Belgium, the Netherlands, and Sweden, which gained at least 2%.
Global Markets Consolidate Near Highs
Developed markets fell 1.5% on average, as 18 of 22 indices ended the week with losses. Indices in Italy (-3.05%), Portugal (-3.1%), Austria (-2.6%), France (-2.3%), Finland (-2.3%), and Norway (-1.8%) clocked in the heaviest losses, while Germany and the U.K. eased back -1.7% and -1.2%, respectively. Two of the worst-performing markets year-to-date, Australia and Hong Kong, happened to be the best-performing markets for the week, though they only managed to rise marginally.
