"A sharp increase in violence in Iraq, coupled with the prospect of higher lending rates this year, pushed many global stock markets lower in April," said Patrick Kerr, Associate Director, Standard & Poor's. "Much of the decline was due to the rebounding U.S. dollar, however, which rose after a string of reports reflected continued momentum in the U.S. economy, suggesting higher lending rates are likely."
Rising U.S. Dollar Takes Its Toll
Strong economic data in the U.S. strengthened the dollar against most major world currencies in April, curbing returns for dollar-denominated investors. The S&P/Citigroup BMI Global Composite posted its weakest monthly performance in U.S. dollar terms since January 2003, but in local currency terms the selling pressure appeared much less pronounced. In local terms, the BMI Global fell by just 0.96%, less than the decline in September 2003, which was at the time accompanied by a weaker dollar that increased returns for dollar-denominated investors.
Emerging Markets Winning Streak Halted
For the first time since September 2003, value stocks under-performed growth stocks, although both groups fell. April also saw the conclusion of 12 straight monthly gains for the BMI Emerging Composite, which tumbled 7.90%, with the 13.95% plunge for the BMI Emerging Europe worst among all major global regions. The BMI Latin America and the BMI Mid-East & Africa posted respective declines of 9.57% and 9.42%, and the BMI Emerging Asia-Pacific fell 5.48%.
"Despite a handful of isolated gains, many markets tumbled by double-digit percentages, both in local and U.S. dollar terms," said Kerr. "Emerging markets in Europe and Latin America were generally weaker than elsewhere, although all four major regional groupings fell in the month."
Growth Takes Value
For the first time since September 2003, value stocks under-performed growth stocks, although both groups fell. The BMI Developed World Value dropped 2.80%, while the BMI Developed World Growth decreased 1.90%, each in U.S. dollar terms. Outside the U.S., however, the style gap was much narrower. The BMI World ex-U.S. Value fell 2.73%, while the BMI World ex-U.S. Growth dropped 2.57%.
Small-cap Slowdown
Small-cap stocks fell for the first time since February 2003, as the Extended Market Index (EMI) Developed World fell 3.88% in U.S. dollar terms, finally ending the impressive string of monthly gains for small-cap stocks worldwide. Large-caps outperformed for just the third month since January 2003, with the Primary Market Index (PMI) Developed World weaker by 1.92% in April (a decline that was just 0.27% in local currency terms). Declines were steeper but more evenly distributed in the Emerging Markets, with the EMI falling 7.60%, versus a 7.99% drop for the PMI.
The full monthly report of index performance and commentary entitled, "The World By Numbers: Global Stock Market Review" offers index performance and total return figures by country, region, market segment and investment style is available on www.indices.standardandpoors.com.
[1] Total returns stated in U.S. dollars for all regions and in local currency for all countries, unless otherwise indicated.
About S&P/Citigroup Global Equity Indices
The S&P/Citigroup global equity index series is a broad, flexible benchmarking system. With coverage of over 7,500 companies in 52 countries, representing 97% of the world market capitalization, the S&P/Citigroup indices measure across size segment, region, country, and sectors. The indices, which provide the world’s only complete free-float adjusted history dating back to 1989, follow a simple rules-based methodology that includes all companies with a total float-adjusted market capitalization greater than US$ 100 million.
More information about the S&P/Citigroup Global Equity Indices can be found on www.indices.standardandpoors.com.
Standard & Poor's
Standard & Poor's, a division of The McGraw-Hill Companies (NYSE:MHP), is the world's foremost provider of independent credit ratings, indices, risk evaluation, investment research, data and valuations. With 5,000 employees located in 20 countries, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit www.standardandpoors.com.
