The weakness across global markets is primarily the result of concerns about the emerging markets. Economic improvements across developed economies, particularly in the U.S. and Europe, has led to outflows from emerging markets that put pressure on their currencies.
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.
Developed Markets Lead Global Selloff
Capped by Friday’s losses, all 23 developed markets fell
this week. Leading 2013 indices, including those in the
U.S. and Japan, are now among the laggards yearto-
date. Outperforming indices in Ireland, Denmark,
Portugal, Italy, Spain, and Austria were not immune,
each falling from 1.0-3.5% on Friday alone.
Emerging markets fared better. Seven of the 22 indices
posted gains for the week, led by some of the weakest
performers in 2013—China, Thailand, the Philippines, and
Indonesia.
Europe Off to an Early Lead
While many of 2013’s leading global markets are consolidating and showing tepid year-to-date performance (<.5%), European indices have accelerated their performance in 2014. Year-to-date, all the best-performing markets are from Europe (see last week's commentary), and 10 of the 19 European markets we track are trading at five-and-a-half year highs, except for Germany and Denmark, which are at all-time highs.
Financials Lead in Smaller European Markets
The proportion of global markets in a confirmed uptrend
remained generally steady, above 70% but below 80%, for
a fifth consecutive week.
Most Southeast Asian and Latin American emerging
markets remain in a downtrend, while all developed
markets except Singapore are holding their uptrend.
Look to January for Guidance on 2014
Coming off 30% gains on the S&P 500 in 2013, history suggests that January’s short-term performance could serve as a guide to where the market is headed in 2014.
