Financial Markets 2015 Analysis

Just like the recent financial year, 2015 also had a share of its ups and downs in the financial markets. 2015 saw the stocks bull market entering its seventh calendar year at 17,823 and closing the year at 17,425. This indicates that it managed to slump 398 points which is approximately -2.2%. This is primarily attributed to the Dow Jones entering into a consolidated trading range for the last two months of the year a period when the stocks are supposed to perform well. However, weakness in the stock market towards the end of 2015 can be greatly attributed to the Fed’s decision in Mid December to raise the United States interest rates.

The first half of 2015 saw the stock market trading in a tight range before taking a 14% fall to 15,370 in August. This fall made many speculators of the imminent market crash crawl out of their woodwork to once more declare that the bull market was doomed. The majority of them gave early warnings of an imminent crash and became, even more, vocal when the Dow hit 15,370.

After hitting this lows (15,370) the Dow found a very strong support level that led to a bullish rally that continued up to early November where it hit 18,000. However, the Santa rally that was supposed to push the Dow past the 18,000 mark before the end of the year failed to materialize.

The Eurozone crisis was another topic that hit the financial headlines. At the height of Greece’s debt crisis, the majority of experts had worries that the exiting of Greece from the Eurozone will have a butterfly effect to the rest of the world. They argued that if by any chance Greece defaults its debts and exits the Eurozone, the world would experience a huge global financial shock.

The deepening of the Greece debt that also marked the worsening of the Eurozone crisis led to the slumping of stock prices across Europe towards the end of the month of June 2015. This was after Greece shuttering its banks for a whole week following ‘a destructive weekend that shook the Europe’s single currency.

The closure of the Greek nation banks that was attributed by the European Central Bank’s (ECB’s) decision of raising stakes by petrifying the liquidity lifeline that kept Greece afloat in a six-month run on their deposits, led to the fall of FTSE 100 in London by 150 points which is more than 2%. Other severe falls were also felt in other countries across Europe such as the German and French markets that both ended up tumbling by 4%. The European banking shares suffered a 10% loss making them the hardest hit.

The ripple effect of the “Greece Butterfly” spread up to Asia where in Tokyo, the Nikkei fell by almost 3% as the Hong Kong shares fell 2.5% overnight.

The transition of China from export and investment-led boom the previous generation towards a more sustainable economic approach saw the country’s economy slow down thus leading to a 38% decline in the Shanghai composite index in the month of June. The slumping of the Shanghai composite index by 8.5% in the month of August led to a turbulent or churning market where it saw the U.S Standard and Poor 500 (S&P) 500 stock index go down by 3.9%.

Financial Markets 2015

2015 was marred with a number of financial difficulties but the world economy managed to survive a financial crush as many “prophets of doom” had hinted. However, the market with its dynamic and unpredictable nature also did not work 100% in favor of speculators of the Santa rally by the Dow since the market went into a ranging trend.