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End of 2004 year market surges { December 26 2004 } Original Source Link: (May no longer be active)
http://news.ft.com/cms/s/561d8aae-5776-11d9-a8db-00000e2511c8.htmlhttp://news.ft.com/cms/s/561d8aae-5776-11d9-a8db-00000e2511c8.html
Markets refuse to slow down
By David Larking and Chris Flood
Published: December 26 2004 20:04 | Last updated: December 26 2004 20:04
Asking global equity markets to repeat last year's gain of 31.4 per cent in 2004 was always going to be tough. But after a 12.3 per cent increase in 2004, the FTSE All-World index reached its highest level since February 2001.
The performance is all the more respectable given the rocketing price of oil. Concerns over shortages and stronger than expected demand pushed the benchmark Nymex crude futures contract to an all-time nominal high of $56.35 on October 22.
This lifted global oil & gas shares by 25 per cent, making them the fifth-best performers of any sector. But the strongest sector was leisure and hotels, up 31 per cent as fears about terrorism and the Iraq conflict receded and the US casino industry was transformed by two huge mergers.
Volatility has been a scourge for many fund managers in recent years, but in 2004 equity markets were constrained within the narrowest trading ranges in living memory.
The peak for the S&P 500 in 2004 was only 13.8 per cent above its year low and trading ranges in Europe and the UK were even tighter. This made 2004 a year for stock-picking rather than making sector or country calls. Nevertheless, there was some evidence of rotation away from the cyclical sectors that had performed well in 2003. Information technology hardware, the worst-performing sector, fell 3 per cent, and media rose only 6 per cent. Defensive sectors fared better, with electricity stocks up 22.6 per cent and tobacco gaining 21.2 per cent. The main disappointment of the year was the pharmaceuticals sector, where concerns over drug safety led to a fall of 0.3 per cent.
While the mounting cost of resources dragged on larger bourses, commodity-linked equity markets turned in good performances. In dollar terms, South Africa gained 47.3 per cent, Australia 24 per cent and New Zealand 23 per cent.
The decline in the dollar was a major theme for 2004, with the trade weighted index falling almost 5 per cent over the year and 10.5 per cent from its 2004 peak in mid-May.
Gold benefited from its role as a hedge against dollar weakness, with bullion peaking in November at a 16-year high of $452.80 per troy ounce. But strong demand from China ensured that many other metals prices traded at multi-year highs.
The year's key monetary event came in June when the Federal Reserve decided to raised US interest rates from their 29-year low of 1 per cent the first of five quarter-point rises. Looking across the FTSE All-World picture in dollar terms this year, canny investors who spotted Egypt or Colombia as the place to invest last January have more than doubled their money. The performance of larger markets was more muted. The US was up 8.9 per cent for the year, the UK gained 14.5 per cent, and Japan rose 10.1 per cent.
The FTSE Eurozone index rose by 16.2 per cent with smaller countries such as Austria and Belgium, up 61 per cent and 41 per cent respectively, beating France and Germany, which managed gains of 14.6 per cent and 11.4 per cent respectively. Emerging European markets had an outstanding year, led by Hungary, up 86.5 per cent, and the Czech Republic, up 80.1 per cent.
Maybe the most surprising performance of the year was the FTSE China index, down 8 per cent, despite its ongoing boom.
All figures in US dollars to the December 22nd close of trading
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