What global markets have come through in 2015 - Round-up

For global investors, 2015 appeared to be a year to forget, with stocks, commodities, currencies - all dressed in red and volatility hitting unprecedented levels. Even trifling gains in bonds are being wiped out by what little inflation there is in the global economy.

What do we have so far?

• The MSCI All Country World Index of shares is lower 6.6 percent in 2015 including dividends.
  
• The Bloomberg Commodity Index has dropped 16 percent.
  
• A Parker Global Strategies LLC index of currency funds dropped 1.8 percent. 
• The Bloomberg JP Morgan Asia Dollar Index, which tracks the region’s 10 most-active currencies outside of Japan, has dropped 5.1 percent this year to the lowest levels since 2009. A similar measure for Latin American currencies tumbled to a record.
• The average level of Bank of America’s Market Risk Index, which gauges price swings in equities, rates, currencies and raw materials, was the highest this quarter since the end of 2011. 
• In the U.S., the Standard & Poor’s 500 Index has fallen about 7 percent since the end of June as companies reported a 1.7 percent slump in second-quarter earnings and cuts to analyst profit estimates outnumbered increases for 17 straight weeks.
• The Chicago Board Options Exchange Volatility Index, a measure of fluctuations known as the VIX, hit levels not seen since 2011 in August.

China threat

The world's second largest economy has been the biggest source of nervousness for investors, after rout in the nation’s financial markets fueled concern that the country’s worst economic slowdown since 1990 was deepening.

The Shanghai Composite gauge fell 29 percent in the third quarter, the most worldwide, and the yuan dropped 2.4 percent after Beijing devalued the currency in August.

Elsewhere, emerging-market stocks fell the most in four years in the third quarter, while local-currency sovereign bonds gave up about 3 percent. Brazil’s real plunged to a record low in September as the nation’s credit rating was cut to junk by Standard & Poor’s.

Commodities

Only three commodities managed to escape the 2015 carnage. Brent crude oil fell below $50 a barrel on the highest OPEC output in seven years.

Copper touched a six-year low, while platinum fell 15 percent in the quarter. The silvery metal, used in devices that restrain harmful emissions from cars, was hit after Volkswagen AG’s attempts to rig pollution tests for U.S. diesel engines.

Glencore Plc, the commodities group that’s become a proxy for the industry’s troubles, fell 69 percent year-to-date on the London Stock Exchange.

Fed threat

Many analysts, including Tony Crescenzi at Pacific Investment Management Co., say that the “phantom rate hike” this month has only added to global volatility. 

The Fed's meeting in September brought no rate hike with Fed Chairwoman Janet Yellen referring to global instability and China turmoil. The International Monetary Fund warned recently that global interest rates could drive a new credit crunch in emerging markets, as companies that have ridden the wave of cheap money to load up on debt will slide into crisis.

Traders in the futures market have been pushing back forecasts for Fed increase. They’re pricing in a 41 percent probability the Fed will elevate its benchmark rate by a quarter-percentage point by the Dec. 15-16 meeting, down from 60 percent at the end of August.

Meanwhile, the European Central Bank and the Bank of Japan haven’t ruled out extending their stimulus programs, with strategists including those at HSBC Holdings Plc predicting China will cut banks’ reserve ratios to bolster economic growth.