First Quarter 2015 in Review: International markets melt up

draghi-yellen-kuroda-abeI'm not sure where the first three months of the year went, perhaps they are still buried in Boston's snow piles. Wherever the time disappeared to, the central bankers took center stage in the first quarter and their actions dominated financial markets. The European Central Bank joined the QE party to the tune of at least 1.1 trillion Euros to be spent over the next 18 months. The Bank of Japan continues their monetary experiment of Abenomics and there is increasing speculation that they will push the dial further on stimulus which could last for the next 3+ years. Meanwhile economists in the US speculate on when the Fed will make their first rate hike. We don't expect a rate hike anytime in 2015, and maybe not even in 2016, thanks to low levels of inflation and slowing GDP growth.

With that said, let's take a look around the financial markets.

Stock indices: ECB and BoJ pump their markets to new highs

Yes the currency wars are here. Both the Euro and Yen were devalued versus the Dollar which rose 9% in the first quarter. This helped the European stock market and international markets push to new heights. Germany's DAX index was up a staggering +22% in the first quarter. In Asia, the Shanghai Composite led the charge at +17%, but was followed closely by Japan's Nikkei 225 at +11%. US markets paled in comparison as the S&P 500 barely finished in positive territory and the Dow was in the red.

  PRICE
  % CHG
COMPANY NAME YTD
VENEZUELA CARACAS 28.2%
BUENOS AIRES MERVAL 27.7%
PORTUGAL PSI GENERAL 24.4%
FRANKFURT DAX INDEX 22.0%
PARIS CAC 40 19.0%
SHANGHAI SE COMP IDX 17.1%
AMSTERDAM AEX INDEX 16.5%
AUSTRIAN TRADED IDX 16.5%
MADRID IBEX 35 12.2%
TOKYO NIKKEI 225 AVG 11.2%
RUSSIAN RTS INDEX 11.2%
PHILIPPINES SE COMP 9.3%
SYDNEY ALL ORDIN IDX 7.9%
S KOREA COMPOSITE 6.0%
HONG KONG HANG SENG 5.3%
RUSSELL 2000 4.0%
NASDAQ COMPOSITE 3.5%
LONDON FTSE 100 IDX 3.2%
INDIA BSE 100 INDEX 2.9%
SINGAPORE STRAITS TM 2.6%
BRAZIL S.P. BOVESPA 2.5%
MEXICO INMEX INDEX 2.0%
S&P 500 0.4%
DOW JONES 30 -0.3%
ATHEX COMPOSITE -6.5%

 

Commodities = Deflation

Central bankers are petrified of the risk of deflation and commodities were deflatng almost across the board. Only gasoline, silver, cattle and cotton finished in positive territory and the CRB Index finished -7.9% for the quarter. Here is the ugly picture in commodities.

  PRICE
  % CHG
COMPANY NAME YTD
UNLEADED GAS 7.6%
GASOLINE UNLEAD REG 7.6%
SILVER 6.1%
CATTLE 3.6%
COTTON 3.5%
FEEDER CATTLE INDEX 0.0%
CHICKEN - BROILERS A -0.3%
GOLD -1.0%
LME-LEAD CASH -1.0%
LME-ALUMINUM -1.8%
LME-SPECIAL HIGH GRD -3.1%
CORN -3.9%
LME-COPPER GRADE A -4.1%
COPPER CATHODES -4.3%
SOYBEANS -4.8%
SOYBEANS OIL -5.7%
COCOA -5.9%
PLATINUM -6.7%
CRB INDEX -7.9%
HEATING OIL -8.1%
PALLADIUM -9.5%
CRUDE OIL -10.6%
OATS -10.9%
NAT GAS HENRY HUB -12.0%
NATURAL GAS -12.7%
WHEAT -14.0%
SUGAR -14.2%
LME-NICKEL CASH -14.9%
SOYAMEAL USA -16.6%
LUMBER -17.1%
COFFEE -19.6%
BALTIC EXCHANGE DRY -23.4%
LME-STEEL BILLET MED -39.2%

 

US Equities by Sector

Healthcare and consumer stocks were the clear leaders in the first quarter. Biotechs were especially strong as the iShares Nasdaq Biotech ETF (IBB) finished up 13%. Utilities were surprisingly weak given that bond yields declined. Financials were also weak thanks to expectations of the Fed interest rate hike which would squeeze their net interest margins.

  PRICE
  % CHG
COMPANY NAME YTD
SPDR HEALTH CARE SEL 6.0%
SPDR CONSMR DISC SEL 4.4%
SPDR CONSUMER STAP 0.5%
SPDR MATERIALS SELCT 0.4%
SPDR TECHNOLOGY IDX 0.2%
SPDR INDUSTRIAL IDX -1.4%
SPDR ENERGY INDEX -2.0%
SPDR FIN'L INDEX -2.5%
SPDR UTILITIES INDEX -5.9%

 

S&P 500: Winners and Losers

    PRICE
Winners TICKER % CHG
  SYMBOL YTD
HOSPIRA HSP 43.4%
KRAFT FOODS KRFT 39.0%
SKYWORKS SOLUTIONS SWKS 35.2%
FIRST SOLAR FSLR 34.1%
BOSTON SCIENTIFIC BSX 34.0%
URBAN OUTFITTERS URBN 29.9%
NEWFIELD EXPLORATION NFX 29.4%
VALERO ENERGY VLO 28.5%
VULCAN MATERIALS VMC 28.3%
KOHL'S KSS 28.2%
MALLINCKRODT PLC MNK 27.9%
MONSTER BEVERAGE MNST 27.7%
MARTIN MARIETTA MTLS MLM 26.7%
AVAGO TECHNOLOGIES AVGO 26.2%
AMERISOURCEBERGEN ABC 26.1%
CIGNA CI 25.8%
HARMAN INT'L IND HAR 25.2%
ELECTRONIC ARTS EA 25.1%
BIOGEN IDEC BIIB 24.4%
ENDO HEALTH SOLUTONS ENDP

24.4%

    PRICE
Losers TICKER % CHG
  SYMBOL YTD
SANDISK SNDK -35.1%
ENSCO PLC ESV -29.6%
RALPH LAUREN RL -29.0%
CHESAPEAKE ENERGY CHK -27.6%
DIAMOND OFFSHORE DRL DO -27.0%
MATTEL MAT -26.1%
FOSSIL GROUP FOSL -25.5%
NAT'L OILWELL VARCO NOV -23.7%
MICRON TECHNOLOGY MU -22.5%
HEWLETT-PACKARD HPQ -22.4%
SEAGATE TECHNOLOGY STX -21.8%
FMC TECHNOLOGIES FTI -21.0%
TRANSOCEAN RIG -20.0%
FREEPORT-MCMORAN FCX -18.9%
ALCOA AA -18.2%
WESTERN DIGITAL WDC -17.8%
TIFFANY & COMPANY TIF -17.6%
CONSOL ENERGY CNX -17.5%
KLA-TENCOR KLAC -17.1%
PVH CORP PVH -16.9%

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What are you expecting for the rest of 2015? How are you positioned?

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About the Author: Chris Wang

Chris Wang

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