Global Equity Markets Kick-Off 2006 With Strong Start, Says S&P

Despite the price of oil nearing $70 a barrel, global equity markets finished the month of January in positive territory except New Zealand, reports Standard & Poor's. Europe came out of the blocks strong in January, helping to push the

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Despite the price of oil nearing $70 a barrel, global equity markets finished the month of January in positive territory except New Zealand, reports Standard & Poor’s.

Europe came out of the blocks strong in January, helping to push the S&P/Citigroup Developed World Index to a 5% gain for the month. The European Broad Market Index (BMI) started off 2006 with a 6.98% increase followed by Asia-Pacific and North America gains of 5.12% and 3.90% respectively. On an individual country basis, European countries posted the best returns in January.

“Ignoring energy prices, investors seemed to have been focused on a number of positive factors in January,” says Nicholas Anions, analyst at Standard & Poor’s Index Services. “In Europe, production and unemployment numbers reported during January were strong, as were consumer and business confidence figures. The situation in the US was similar, but only to a lesser degree, with the belief that the Federal Reserve is nearing the end of its run on interest rate increases.”

Emerging markets shot up 11.09% in January, as the month represented the best monthly performance for the S&P/Citigroup Emerging Markets Index since January 2001. Brazil, Russia, China, and South Africa were the main contributors to performance, showcasing returns of 24.67%, 19.96%, 14.91% and 14.89% respectively. Only Taiwan and Jordan lost ground during January, with Taiwan actually up when measured in US dollars.

Sectors, as defined by GICS, saw energy finish up 13.28% in January. The energy sector performance was widespread as each sub-industry posted strong returns, with a significant number of companies showing gains in excess of 20%. The materials sector, which rose 9.9% during the month, was the next best performing GICS sector.

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