.jpg)
Defensive-oriented stocks in Europe have bounced back since Federal Reserve Chairman Ben Bernanke recently announced the decision to continue its historic bond buying program. After gravitating toward more dynamic-oriented stocks and moving away from defensive-oriented stocks when Bernanke first discussed tapering on May 22, in the past week investors appear to have moved back into defensive-oriented European stocks and sectors, as illustrated by the Russell Indexes.
- After underperforming the Russell Developed Europe Dynamic Index by more than 6% between May 22 and September 17, the Russell Developed Europe Defensive Index outperformed its Dynamic counterpart by 0.3% between September 18 and September 24.
- The Russell Developed Europe Index Healthcare sector, after losing (-3.3%) between May 22 and September 17, has gained 0.7% between September 18 and September 24. The Russell Developed Europe Index Consumer Staples sector, after losing (-3.4%) between May 22 and September 17, has gained 0.3% between September 18 and September 24.
"The FOMC 'no taper' decision surprised the market and suggests that the Fed's assessment is that U.S. economic and inflation data are softer than they had previously let on," said Stephen Wood, Chief Market Strategist at Russell Investments. "Given the yield implications of the Fed's non-move, and the expectation of another acrimonious debt-ceiling negotiation in Washington, index data suggest that European investors appear to have taken a more defensive stance, gravitating toward higher quality defensive stocks and defensive sectors."
--------------------------------------------- -------------- --------------
Sept 18, 2013
Jan 1, 2013 - May 22, 2013 - - Sept 24,
Index May 21, 2013 Sept 17, 2013 2013
----------------------------------------------------------------------------
Russell Developed Europe Index 13.5% 1.7% 0.4%
----------------------------------------------------------------------------
Russell Developed Europe
Defensive Index 14.6% -0.8% 0.5%
----------------------------------------------------------------------------
Russell Developed Europe
Dynamic Index 12.4% 5.3% 0.2%
----------------------------------------------------------------------------
Russell Developed Europe Index
Sector
----------------------------------------------------------------------------
Technology 15.7% 6.3% 0.6%
----------------------------------------------------------------------------
Utilities 12.1% 5.1% 0.5%
----------------------------------------------------------------------------
Producer Durables 13.1% 5.8% 0.8%
----------------------------------------------------------------------------
Consumer Discretionary 17.4% 7.0% 0.2%
----------------------------------------------------------------------------
Energy 6.8% -2.0% 0.3%
----------------------------------------------------------------------------
Materials & Processing 1.8% 2.0% -0.3%
----------------------------------------------------------------------------
Consumer Staples 14.8% -3.4% 0.3%
----------------------------------------------------------------------------
Health Care 22.4% -3.3% 0.7%
----------------------------------------------------------------------------
Financial Services 15.7% 2.0% 0.2%
----------------------------------------------------------------------------
Source: Russell Investments.
