Many World Equity Markets Droop in April

An S&P news release said April’s performance continues March’s descent for the BMI Global Composite, which measures over 7,500 stocks across 52 countries covering 97% of global market capitalization.

“A sharp increase in violence in Iraq, coupled with the prospect of higher lending rates this year, pushed many global stock markets lower in April,” Patrick Kerr, Associate Director, Standard & Poor’s, said in a news release. “Much of the decline was due to the rebounding U.S. dollar, however, which rose after a string of reports reflected continued momentum in the U.S. economy, suggesting higher lending rates are likely.”

Indicators of a strengthening U.S. economy bolstered the dollar against most major world currencies in April, curbing returns for dollar-denominated investors, S&P said. The S&P/Citigroup BMI Global Composite posted its weakest monthly performance in U.S. dollar terms since January 2003, but in local currency terms the selling pressure appeared much less pronounced. In local terms, the BMI Global ticked down by just 0.96%, less than the decline in September 2003, which was at the time accompanied by a weaker dollar that increased returns for dollar-denominated investors.

For the first time since last fall, value stocks lagged growth stocks, although both groups fell.   The BMI Developed World Value dropped 2.8%, while the BMI Developed World Growth decreased 1.9%, each in U.S. dollar terms.   Outside the U.S., however, the style gap was much narrower.   The BMI World ex-U.S. Value fell 2.73%, while the BMI World ex-U.S. Growth dropped 2.57%. 

April also saw the conclusion of 12 straight monthly gains for the BMI Emerging Composite, which tumbled 7.9%, with the 13.95% plunge for the BMI Emerging Europe worst among all major global regions. The BMI Latin America and the BMI Mid-East & Africa posted respective declines of 9.57% and 9.42%, and the BMI Emerging Asia-Pacific gave back 5.48%.

Small-cap stocks fell for the first time since February 2003 as the Extended Market Index (EMI) Developed World fell 3.88% in U.S. dollar terms, finally ending the string of monthly gains for small-cap stocks worldwide.   Large-caps pulled ahead for just the third month since January 2003, with the Primary Market Index (PMI) Developed World weaker by 1.92% in April.   Declines were steeper but more evenly distributed in the Emerging Markets, with the EMI falling 7.6%, versus a 7.99% drop for the PMI. 

The full monthly report, The World By Numbers: Global Stock Market Review is available at  www.indices.standardandpoors.com .