December 3, 2023

Global Markets Fail to Post Gains in 2011

On Friday, the Standard Poor’s 500-stock index traded off less than a point in early trading, while the Dow Jones industrial average was down 0.2 percent.

The S.P. 500, a benchmark for the broad market, had a razor-thin 0.2 percent gain for the year so far by mid-morning, while the Dow was up 6 percent for the year.

Major European and Asian indexes, however, descended by double-digit percentages in 2011.

Trading volumes thinned out during the holiday season, capping off with a whisper what was a year of political turmoil and financial upheaval that saw governments overturned and prospects for sovereign defaults sharpen.

The euro zone debt crisis set off volatile swings in equity markets that had investors turning to safer assets, while one of the safest assets historically — United States debt — suffered its first ever downgrade to its AAA credit rating.

On Friday, crude oil futures traded in New York were slightly lower at $99.23 a barrel, after rising to $101.34 this week, their highest level since June. In recent days, tensions have bubbled to the surface after Iran threatened to close the Strait of Hormuz if sanctions were imposed on its oil shipments.

Materials and energy shares rose the most on Friday, although their gains were less than 0.5 percent in early trading. Financial stocks were down, following their 2011 trend.

The yield of the benchmark 10-year Treasury, which moves in the opposite direction of its price, was down 2 basis points Friday to 1.876 percent, on track to finish the year well below its 3.75 percent yield in the beginning of 2011.

“The great Treasury rally of 2011 was attributable in large part to events that many of us would have considered unlikely at that time,” said Kevin H. Giddis, the executive managing director and president for fixed-income capital markets at Morgan Keegan Company, “namely, the Arab spring, the loss of the United States’ AAA rating, the devastating earthquake in Japan, and the European monetary pact becoming dangerously close to breaking apart.

As 2011 ends, “the investing landscape doesn’t look all that different,” he wrote in a year-end market commentary. “To put it charitably, economic conditions in Europe remain tenuous, with no clear end in sight.”

Some analysts expect the focus in 2012 to swing back to fundamentals in the United States as investors try to gauge how successfully the country can “de-couple” from Europe’s woes.

The FTSE 100 index of leading British shares closed up 0.1 percent for the day but down 5.6 percent for the year, while Germany’s DAX ended 0.9 percent higher for the day and 14.7 percent lower for the year.

The CAC 40 in France was 0.4 percent higher in late trading, about 18 percent down for the year. The Nikkei 225 closed down more than 17 percent for the year, while the Hang Seng Index was down nearly 20 percent.

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