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Rebound begins for global markets Add to ...

Standard & Poor's global stock market review for July tells a tale of pain and recovery in virtually every sector.

On first blush, S&P senior index analyst Howard Silverblatt's report shows a planet very much in recovery mode. Global markets increased 8.7 per cent in the month, building on gains seen in March, April and May. June saw a 0.58-per-cent step back.

Forty-five of the 46 indexes reviewed ended the month higher (sadly, Morocco's 5.23-per-cent retreat prevented a uniformly positive month).

"Encouraged by better news, and a lack of bad news, most markets worked under the belief that the bottom is here and looked ahead for improved economic conditions," Mr. Silverblatt said. "The overall picture changes, however, when looking at longer periods."

Better, but still bad

Mr. Silverblatt points out that the global rebound for equity indexes - which started in earnest in mid-March - has put $2.09-trillion (U.S.) back into investors' pockets. That is something to be grateful for, but for the fact that they are still down $7.16-trillion compared to where they were just one short year ago.

Emerging markets are up 51.96 this year, but are still down 18.09 per cent in the past 12 months. Developed markets are up 15.35 per cent on the year, but are down 23.28 per cent in the past 12 months. The Philippines is the only market in the world that has posted a positive return in the past 12 months, with a gain of 2.69 per cent. The S&P/TSX is up 21 per cent so far this year, and down 18.7 per cent in the past 12 months.

By the sector

All 10 sectors used to measure the markets (the same as the sectors used to break up the S&P/TSX) posted positive returns in the month. Three sectors even managed to post double-digit gains in the month, with materials (11.81 per cent), financials (10.95) and consumer discretionary (10.86) leading the markets.

"All 10 sectors are posting double-digit losses for the 12-month period," Mr. Silverblatt said.



S&P Global BMI GICS Sector Results

Market cap (US$-bil)

Weight

July % Return

2-month % Return

YTD % Return

12-month % Return

Energy

$2,758

10.85%

4.42%

14.33%

16.31%

-30.74%

Materials

$2,066

8.13%

11.81%

25.08%

39.42%

-30.41%

Industrials

$2,833

11.14%

8.77%

16.34%

14.04%

-28.62%

Consumer Discretionary

$2,446

9.62%

10.86%

15.49%

28.80%

-12.77%

Consumer Staples

$2,310

9.08%

7.42%

18.24%

9.05%

-10.31%

Health care

$2,400

9.44%

6.89%

17.77%

6.23%

-13.91%

Financials

$5,392

21.21%

10.96%

24.97%

20.02%

-29.24%

Information Technology

$3,059

12.03%

9.74%

18.17%

37.16%

-12.60%

Telecom. Services

$982

3.86%

7.44%

16.99%

6.22%

-19.74%

Utilities

$1,181

4.64%

4.10%

12.63%

-1.60%

-26.39%

S&P Global BMI

$25,427

100.00%

8.70%

18.79%

18.52%

-22.74%

Source: Standard & Poor's















Signs of stability

While interest rates trended downward at the beginning of the month as risk aversion crept back into the market, by the end of July they had turned higher. All was quiet on the central bank front, as well, with "sovereigns quiet and content to let their prior actions work their way through the system."

The most important news, at least as far as markets are concerned, was a solidifying of the U.S. housing market in July. Most analysts agree that a solid U.S. housing market is key to any sustained rally on global stock markets.

"Home prices dominated the news, as new home sales posted their best gain in nine years," Mr. Silverblatt said. "The S&P/Case-Shiller home price indices posted [their]fourth month of improving prices, with 13 of the 20 cities posting gains."

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