Global Equity Rout By Numbers

The Yearlong decline in global equities that started with a selloff in the energy sector officially became a full-blown “bear” market on Thursday.

Defination of a Bull/Bear Market:

A cyclical bull market requires a 30% rise in the DJIA after 50 calendar days or a 13% rise after 155 calendar days. Reversals of 30% in the Value Line Geometric Index since 1965 also qualify. A bear cyclical market requires a 30% drop in the DJIA after 50 calendar days or a 13% decline after 145 calendar days. Reversals in the Value Line Geometric Index also qualify.” “Bull and bear markets are measured at peak and trough dates, so both the time and price criteria must be met as of the peak and trough dates.

provided by Ned Davis Research

By the numbers:

  1. This week’s rout in financial shares has extended losses in the broadest worldwide gauge past -20% (MSCI All-Country World Index market) and marks the biggest retreat from risk since Europe’s sovereign debt crisis five years ago.
  2. All 10 primary groups in the MSCI All-Country index have declined since the index touched a high in May 2015, with financial companies, consumer discretionary and tech shares adding onto losses in 2016.
  3. The S&P 500 has lost -11% in 2016, compared with declines of at least -18% in German stocks and the Euro Stoxx 50 Index.
  4. In Asia, the Shanghai Composite Index is down -22% on the year and Hong Kong’s Hang Seng index has erased -15%.
  5. Stocks have been pounded by everything from China’s slowdown to the selloff in oil and rising U.S. interest rates, sending them to the worst start to a year on record
  6. More than $8 trillion erased from global equities this year.
  7. In 2011, the MSCI gauge fell more than -24% between May and October as Europe sovereign crisis raged and S&P stripped the U.S. of its AAA credit rating.
  8. In the U.S, the Nasdaq Composite Index has fallen -18% since July/2015 and the S& P’s 500 Index is about 125 points from its own bear market.
  9. Every industry has fallen since last year’s record high with decreases exceeding -25% in financial stocks and -30% in energy and commodities.
  10. On Thursday, the VIX traded above 30 for the second time this year.
  11. Negative interest rates have helped global stocks enter a bear market, sent the cost of protection against corporate defaults soaring and driven investors to havens such as U.S. Treasury bonds and gold.
  12. U.S. bonds are now indicating the slowest inflation since May 2009 as Investor’s pile into haven assets.
  13. U.S Ten-year notes yield has fallen -30bps in a week and is within touching distance of record lows (+1.62%).
  14. The U.S fixed income market is pricing out any further Fed hikes for this year.
  15. With the U.S. Q4 earnings season halfway done, just 52% of companies in the S&P 500 reported profit growth.
  16. With energy companies and materials shares leading the decline, all but three sectors reported shrinking profits.
  17. It’s estimated that U.S company earnings fell -4.5% in Q4, and is expected to drop another -6.3% in the current period.
Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell
Dean Popplewell

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