World Markets Fall in 2011; Brazil, China, India and Russia Lead Decliners

Bikram Pandey
30 Dec, 2011
New York City

The U.S. indexes struggled to hold slim gains in 2011 and the S&P 500 closed flat and the Nasdaq fell 1.9%. The Dow, considered too narrow for most investors, gained 5.5%. Emerging markets led the global decline with India down 25%, Brazil and Russia dropping 18% and China falling 22%.

[R]4:30 PM New York – The U.S. indexes struggled to hold slim gains in 2011. The S&P 500 index edged up 0.1% and the Nasdaq index fell 1.9%. The Dow, considered too narrow for most investors, gained 5.5%. Emerging markets led the global decline with the indexes in India down 25%, in Brazil and Russia fell 18% and in China declined 22%.[/R]

World markets declined for the first time since the financial crisis of 2008-2009. Emerging markets and European markets led the decline as the euro zone worries spread to international markets.

The U.S. indexes struggled after German Finance Minister Wolfgang Schaeuble expressed confidence that the euro area debt crisis would be under control by the end of 2012.

For the year, the broader index the S&P 500 edged up 0.1% and the Nasdaq declined 1.8% and the Dow Jones Industrial Average increased 6%. The Dow has fallen out of favour among institutional investors as the index tracks small number of mega companies that are not reflective of the overall market health.

Markets in India plunged 24%, in Shanghai declined 22% and in Brazil dropped 18%. The benchmark index in Japan fell 17% and in France declined 17.8% and in Germany fell 15.3%. The index in Toronto fell 11% and in UK declined 6.2%.

European markets edged higher after German Finance Minister Wolfgang Schaeuble ruled out a breakup of the euro area. France planned to raise between €7 billion and €8 billion from its first long-term debt auction on January 5. Spanish inflation eased in December.

The UK indexes gained but for the year plummeted 6%. The UK home prices dropped 0.2% on a monthly basis in December and housing equity injections slowed in the third quarter.

Stocks in Japan suffered from multiple forces driving the market lower for the second year in a row. The Nikkei declined 17.3% in the year after falling 3% in 2010. Freight shippers led the decliners with more than 50% fall and machinery makers and electronics exporters suffered as the yen strengthened.

Stocks in Australia declined for the third day in a row. For the year the ASX 200 index fell 15% with the sharpest drops in retailers, materials and energy linked companies. Billabong plunged 78%, Harvey Norman dropped 38% and David Jones declined 47%.

Commodities, Bonds and Currencies

The yield on 10-year U.S. bond fell to 1.88% and 30-year bond closed down at 2.89%.

The U.S. dollar edged up 0.1% to $1.294 to one euro and traded lower against the Japanese yen to 76.91.

Immediate delivery futures of Texas crude oil decreased $0.64 to $99.01 a barrel and futures of natural gas fell 5 cent to $2.97 per mbtu and gasoline price rose 0.628 cents to 268.83 cents a gallon.

In metals trading, copper increased 6.1 cents to $3.43 per pound, gold increased $25.10 to $1,566.00 per ounce and silver decreased $0.36 to $27.68.