World News 2015: Factors that affected world stoks
Four factors had a major negative influence on stocks this year: an unexpected continuation of decline in commodities, especially oil; persistent strength of the dollar; poor economic growth, fluctuations in stock-market and currency devaluation in China; and the Federal Reserve that began raising interest rates at the end of the year. A year ago, many experts thought that this would happen in the first quarter of 2015.
As we are facing the end of 2015, US stocks seem to be heading for a nearly flat end. The result of 2015 beggars belief as it was a roller-coaster year. Many opportunities for speculative trading, and for many traders its was indeed “good riddance”. If we put the U.S. dollar aside, the majority of assets that stem from the US didn’t do well in the end. Mutual funds have been also trailing the market.
World News 2015: Predictions and results
Generally, market strategists were expecting a rise in stocks of 10%. A nearly double-digit increase in the S&P 500’s earnings per share was expected. But that didn’t happen. The major cause was the second leg of the oil prices drop, as well as the Fed’s unwillingness to raise its rates as a significant aid to keeping the prices down. Financial stocks overall had a hard year, but still showed some improvement, if we take into account the big four US banks, J.P. Chase, Bank of America, Citigroup and Wells Fargo.
Overall in the world decrease in oil prices decimated energy-market stocks. A lesson to be learned for investors is that a decline in oil prices of 45% in 2014 did not mean that a further decline of 30% in 2015 would not happen. But the non-energy sector investors came atop of the game. Especially those, which provide high dividends.
At the same time, the U.S. dollar rose by more than 10%, meaning on top of a 12% improvement last year, came as a surprise to many and did some damage to the EU-US imports rate.
The other major factor was Europe's quantitative easing that hit the Euro, which fell to its lowest lows in 11 years.
The other major rumble was heard on the Chinese stock exchange with several manual stops to the market issued by the government. Stocks have been falling on a daily basis with some reaching a double-digit decrease in the matter of hours. This has shocked the ever-growing Chinese economy, and is a major indicator of upcoming stagnation and market over-saturation.
We can’t omit mentioning uncertainty among technical stocks. If your portfolio missed out to include stocks with triple-digit percentage gains like AMZN, NFLX, FB and GOOGL, then you have seen a major loss in your performance this year.
Housing sector also showed great improvement with very low mortgage loan rates in Europe and the US. This may help improve the commodities sector in the upcoming year.
Finally on the topic of World News 2015, the yearly worst was, to no surprise, the energy sector, which was down 25% overall, after a 10% decrease in 2014.