After yesterday’s waterfall-like selloff, a number of global indices are now in bear market territory (20% off highs).
- Germany’s DAX benchmark is 24% of April 2015 highs
- France’s CAC 40, as of yesterday’s close was nearly 22% of 2015 heights
- The Spanish IBEX is off a full 30% from last April’s highs – Ay, caramba!
Yesterday, the Brits joined this ignominious group, with the FTSE 100 losing 3.3% on the day and falling 20.13% from April ’15 highs. While the London market has clawed back above the 20% mark with a Thursday rally, it’s worth pointing out that the primary U.S. benchmark (SPX) continues to outperform most of their global counterparts.
The SPX made an all-time high in August of 2015 and as of last nights close, was down nearly 13% from those levels. The SPX would have to close at or below 1705 to join their battered, bear-market European counterparts.
A recent Bloomberg article (http://www.bloomberg.com/news/articles/2016-01-20/britain-s-stock-bear-market-story-in-five-charts) points out some salient factors that have contributed to the FTSE freefall. The index is heavily weighted in Energy/Mining (17%) as well as Financials (22%), both of which have been under tremendous pressure.
In early March, the CBOE will roll out options on the FTSE 100 (http://www.cboe.com/products/stock-indexopts/ftse-russell/ftse-100/introduction.aspx) which will give greater access to another global benchmark and, perhaps the opportunity to capitalize on elevated volatility on the other side of the Atlantic.
FTSE 100 – 1 year Chart