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Tuesday, September 27, 2022

World sharemarkets end worst year since 1930s depression


Major world sharemarkets have closed for the year after their worst annual performances since the Great Depression, all losing more than 30%.

Benchmarket indices in London and Tokyo had their largest declines on record with Japan’s Nikkei 225 faring worst with a 42% drop.

The year’s final day of trading on Wall Street is up for the second day, paring the annual loss on the main Dow Jones index to 34%. It closed for the year at 8776.39, its worst annual showing since 1931.

The broader S&P500 is also up, cutting its annual loss to 39%. It closed the year at 903.25.
In Europe, the regional MSCI index lost 45% while its Asian equivalent lost 43%.

In London, stocks climbed for a third day before closing for the year. The FTSE100 index finished at 4434.17, its biggest fall since it was developed in 1984.

The worst performers were HBOS, a troubled bank that lost more than 90% of its value, and Royal Bank of Scotland, which lost 87%.

The FTSE 100’s decline was the smallest among indexes for the world’s 20 biggest markets in local currency terms, data compiled by Bloomberg show. In US dollar terms, the UK benchmark index tumbled more than 49%, thanks to the huge slump in the pound (see below).

France’s Cac40 index closed for the year nearly 43% down at 3217.97. Germany’s Dax30 index finished trading on Tuesday at 4810.20 for an annual loss of 40%.

Only three of 89 major indices tracked by Bloomberg posted gains in 2008, as equities lost $US30 trillion in value. Ghana’s All-Share Index was the best performer, surging 60%.

While the global economic slowdown weighed on stocks in 2008, US government bonds had their best year since 1995.

Currencies: Yen tops in 2008

The Japanese yen made the biggest gain for the year as major world currencies re-aligned substantially. The yen and the US dollar both advanced versus the euro, which has almost reached parity against the pound, the year’s biggest major currency casualty.

The US dollar fell the most against the yen in more than two decades. The dollar last traded at ¥90.76, a fall of 19%.
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The dollar is trading $US1.3947 per euro, boosting its advance this year to 4.7%. The euro declined 22% for the year to ¥126.58.

(The yen’s biggest gains were against the New Zealand dollar (up 62%) and the Australian dollar (up 55%).)

The euro, which today marks its 10th birthday, has gained 30% this year against the pound, partly due to the lower central bank rate of 2.0% in the UK versus the European Central Bank’s 2.5%.

The euro last traded at 95.59p after earlier in the day reaching a record high of 98.03p.

The South African rand was the worst performer against the US dollar in 2008 among major currencies tracked by Bloomberg, weakening 27% to 9.3375.

Commodities: Oil drops most in 2008

Crude oil prices made their biggest annual decline since trading began in 1983. Prices have tumbled 72% since hitting a record $US147.27 a barrel on July 11.

Crude oil for February delivery finished the year at $US41.42 a barrel in New York, down 57% this year, the first annual decline since 2001 when oil fell 26%.

Gold prices made their eighth straight annual gain, rising 4% to finish the year at $US866.90 an ounce after topping $US890 last Monday.

In March, gold reached a record $US1032.70. It has rallied 13% this month as tension in the Middle East rose with Israel’s attacks on Hamas-ruled Gaza.

February-delivery gold was $US867.40 in New York.

Source: The National Business Review

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