Volatility has been a fact of life on global stock markets over the last couple of years but even so, 2022 has been crazier than most.
Take the resources sector.
The best performing sector index year-to-date has been the Dow Jones US Select Oil Equipment & Services index, up 49%, while the S&P Energy Energy Sector index and the Dow Jones US Select Oil Exploration & Production index are both up by 38% or so.
The flip side of the resources coin is the miserable performance of miners, especially in London.
The worst performing index has been the FTSE 350 Sector Precious Metals & Mining index, which is down 45% thanks to Polymetal International PLC (LSE:POLY).
To put that into context, that’s slightly worse than the Russian Trading System index.
Despite this, the FTSE 100, which is heavily weighted towards mining companies, is up 2.7%, making it the second-best performing index after Brazil’s Bovespa stock index.
Flying down to Rio
According to the Bloomberg news agency, global money managers continue to find the Brazilian equity market an attractive punt after years of underperformance.
Companies based in Brazil are benefiting from rising commodity prices and the fact that fund managers looking to invest in BRIC – Brazil, Russia, India and China – are now effectively limited to investing in BIC.
In the first two months of the year, foreign investors pumped about US$12.4bn into the Brazilian stock market, despite which many Brazilian companies trade on low earnings multiples, thanks in part to the weakness of the nation’s currency, although that has prompted the country’s central bank to ramp up interest rates
Commodities giants Vale and Petrobas have been leading the Brazilian stock market’s advance. In the UK, the winners this year have been miners Glencore PLC (LSE:GLEN) (+34%), Anglo American PLC (LSE:AAL) (+31%) and Antofagasta PLC (LSE:ANTO) (+30%) plus defence company BAE Systems PLC (LSE:BA.) (+30%). (War? What is it good for? A handy share price boost in the case of BAe).
Aside from Brazil and the UK – the FTSE 350 and FTSE All-Share are also just about in credit this year – it has been a bad time for the rest of the world’s indices.
In the US, the Dow Jones is off 3.8%, the S&P 500 is down 4% and the once-mighty Nasdaq Composite is 8.3% weaker.
In Asia, Japan’s Nikkei 225 is 2.9% in the hole, Hong Kong’s Hang Seng index is 6.3% cheaper and it’s probably best not to mention Shanghai as the region has just gone into lockdown (but if you insist I mention it, the SSE Composite index for Shanghai is down 11.7% and the CSI 300 index is 16% lower).
In Europe, aside from the UK, the Swiss Market Index (-4/4%) is the best of a bad bunch. Germany’s DAX Xetra is down 7.4% and France’s CAC 40 is 5.5% in arrears.
Before we Brits start to celebrate too effusively, spare a thought for AIM-listed companies, many of which have taken a shellacking this year.
The FTSE 100 AIM index has lost 16% of its value this year and the only thing stopping it from qualifying as the worst performer among major indices is the 44.6% fall registered by the Russian Trading System index.
Ouch.