Japan's Nikkei 225 was the only market on my world watchlist with a gain for the week, and a handsome one at that, up 4.28%. Of course, that comes after four weeks of savage losses. The SENSEX and S&P 500 finished in a near dead heat for second place, down a bit over two percent. The other five indexes ranged from -3.05% to -4.15%. The biggest declines for the seven losers began Wednesday afternoon when the US Federal Reserve put a potential timeframe and conditions for the end of QE. What we saw was the beginning of what could be a significant price discovery process as world markets gauge the impact on liquidity of an exit strategy for the US central bank's purchases.
The Shanghai remains the only index on the watch list in bear territory -- the traditional designation for a 20% decline from an interim high. See the table inset (lower right) in the chart below. The index is down a whopping 40.28% from its interim high of August 2009. The S&P 500 remains closest to its interim high (which is its all-time high) with a gap of 4.60%. The DAXK is a distant second at 9.03% off its interim high.
Here is a closer look at the YTD performance, which, more than anything, illustrates the power of Abenomics to levitate the Land of the Rising Sun to its interim high on May 22, followed by a sudden and dramatic selloff and partial recovery last week. But we can also see the coordinated slide of late in the other seven indexes.
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