Markets declined broadly in December, as 47 of the 48 markets fell, with New Zealand the only one up, 2.31%. The broad decline occurred in response to oil’s continued supply and weaker demand, which pushed its prices lower, Howard Silverblatt, Senior Index Analyst, S&P Dow Jones Indices highlighted.
“Although the lower cost helped consumers, it has diminished sovereign income, both directly and via lower taxes on products. Adding to the pain of the month was continued talk of another round of recessions in Europe, whilst Japan was already officially in one,” Silverblatt said,
China’s growth was also seen as continuing to decline, as the country’s government changed regulations to help lending and stimulate its economy.
The US, however, was the major beneficiary, as its economy continued to slowly improve, and the US dollar continued to grow stronger, even as the US market fell 0.19% for the month (the second best of the 48 markets).
Emerging Markets fell in 2014 marking the second year of declines
According to Silverblatt’s analysis, all 23 emerging markets declined in December, as the group fell 4.90%, with the best market being the Philippines, which declined 0.40%. Russia, which closed off its lows, did the worst, falling 23.88% for the month, as Greece fell 15.56% as its parliament was unable to elect a president, with new elections called for early 2015.
“For the year, emerging markets fell 2.06%, marking the second year of declines (they fell 4.02% in 2013). For the year, 11 of the 23 emerging markets posted gains, led by India, which was up 31.63% even though it pulled back 3.91% in December. Egypt was similar, with a 2014 gain of 26.30%, after a December fall of 4.33%. Russia did the worst, declining 49.85% for the year, as lower oil prices combined with western sanctions to put that country on the edge of a recession. Greece was off 39.65% for the year, as concern over the upcoming election and its impact on creditors was a major issue,” the analyst said.
7 out of 25 Developed Markets gained in 2014
Developed markets declined in December, although not as drastically due to the US’s minor 0.19% decline, which reduced the broad 3.02% December fall (excluding the US) to a 1.43% decline. Of the 25 markets, 24 were down, with New Zealand the only other market up for the month, adding 2.31%.
European markets declined for the month, as uncertainty grew over their recovery and financing. Portugal fell the most, off 10.37%, Italy declined 7.57% and Spain was 7.48% lower. Japan fell 1.01%, and the U.K. was off 2.13%.
“For the year, the developed market’s 2.42% gain doesn’t tell the story, since without the US’s 10.38% gain (which was the best of any developed market), they were down 6.43% — over three times the emerging market’s 2.06% loss for the year. For the year, 7 of the 25 markets gained, as Israel posted an 8.76% gain, second only to the US. Portugal did the worst, off 33.84%, followed by Norway, which was down 24.11%, and then Austria, which closed the year 21.08% lower than its opening,” he concluded.