German And Swiss Markets Recover As UK Slips Into Recession

Updated on

COVID-19 has had a devastating effect on stock markets around the world, but as some begin to recover, EXANTE senior analyst, Viktor Argonov looks at which markets are recovering quicker than others, such as the Euro Stoxx 50 index.

Get The Full Ray Dalio Series in PDF

Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q2 2020 hedge fund letters, conferences and more

Euro Stoxx 50 Index vs North American Index

The general state of the economy in the EU, shown by the Euro Stoxx 50 index, is worse than for any North American index.

However, a lot can be learnt from countries such as Switzerland and Germany, which have nearly recovered, with their indices being only 3% below the level they were at the beginning of the year.

The UK may on the other hand is in deep recession, and Italy and France are still suffering with their indices still 15-19% lower than their January values.

Nevertheless, it seems that Global markets as a whole are on the upward trend. The Global Dow index best reflects the average state of the global economy has almost returned to where it was in January after dropping by 35% as a result of the crisis. But its value is still 8% less than at the beginning of the year and 10% less than the pre-crisis maximums shown during the winter. The economies of individual countries are best compared to Global Dow (whether any specific parameter is better or worse).

This rating lists the indices of the leading trading platforms of the world's largest economies, as well as the Global Dow index, the European Union's Euro Stoxx 50 index, and the indices belonging to small but rich countries by GDP per capita: Switzerland, the UAE, Australia, and Saudi Arabia.

The data is listed for the end of July.

region country index Dec, 30 Max in Jan-Feb Min in March Jul, 29 July, 29 / Dec, 30 Jul, 29 / Max Jan-Feb
North America USA Nasdaq Composite 9021   9731   6880     10402  +15%  +7%
East Asia China Shanghai Composite 3040  3116  2660  3273   +8%  +5%  
East Asia South Korea Kospi 2176  2251   1566  2258  +4%   +0%  
West Asia Turkey XSIST 118       125   83   123  +4%  -1%  
North America USA S&P 500      3235   3380   2305   3218    -1%   -5%  
West Europe Germany DAX   13249   13789     8442   12835    -3%  -7%  
West Europe Switzerland SMI   10617  11263   8161   10277    -3%   -9%   
East Asia Japan Nikkei 225  23657  24041   16553     22428     -5% -7%
North America Canada TSX Composite 17099 17944   11228    16169 -5%   -10% 
East Europe Russia iMOEX  3046    3220  2113   2895   -5%   -10%  
East Asia India NIFTY 50 12256       12362  7570    11263   -8%    -9%
World Global Dow 3247      3300   2135  2972   -8%    -10% 
North America USA Dow Jones  28635 29398 19174 26379 -8% -10%
South America Brazil BVSP   115645 119528 63570 104109 -10% -13%
West Europe EU Euro Stoxx 50          3691 3865  2386  3304  -10% -15% 
West Asia Saudi Arabia TASI       8345   8475   5960   7459  -11%  -12%
Oceania Australia ASX 200    6805 7190 4531 6010   -12% -16%
East Asia China (Hong Kong) Hang Seng  28451 29056   22805     24802     -13%     -15%  
West Europe Italy FTSE MIB 40     23506  25478 14470  19903  -15% -22%  
West Europe France CAC 40     5982 6111 3755  4929   -18%   -19%  
Oceania Indonesia JKSE   6300 6325 3938 5102 -19% -19%
West Europe Britain FTSE 100       7587 7675 4994 6128   -19% -20% 
West Asia UAE DFM General   2770   2863  1682 2063 -26% -28%

North America and East Asia

These show the best recovery rates. In particular, the Nasdaq Composite and Shanghai Composite indices, as well as the South Korean Kospi index, have fully recovered from their crash during the crisis, and even surpassed the levels shown at the beginning of the year. The reasons for this are obvious. The pandemic in East Asia began earlier, but the measures taken were swift and effective. The countries in North America took a worse hit from the pandemic, but they turned out to be economically powerful enough to keep the indices high. As for Nasdaq Composite, it enjoyed an especially privileged position as it included many IT giants that remained in high demand during the outbreak.

Euro Stoxx 50 index Vs Eastern Europe Stocks

Represented by Russia in the table, as the situation there has many unique features. Its economy is recovering at a slightly above average rate, and its index is only 5% lower than at the beginning of the year – along with Japan and Canada, which have also fared relatively well.

Other regions

The situation is at its worst in other regions: West Asia, Oceania, and South America. Out of all countries listed from these regions, only Turkey is in the upper half of the rating, as it has already exceeded the level shown at the beginning of the year by 4%, and is only 1% below the pre-crisis maximums. Things are at their worst in countries such as the UAE and Indonesia: -19-26% compared to the beginning of the year, and -19-28% compared to pre-crisis maximums.