Global Stock Markets: A Weak Dollar Illusion

I posted a scorecard for a number of global stock markets a week ago, showing the index movements since each of the respective market’s highs. This short post provides an update, but this time also showing returns in U.S. dollar and euro rather than only in local currency terms.

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Source: Plexus Asset Management (based on data from I-Net Bridge)

Whereas the local currency comparison seems to point to the S&P 500 Index and the Dow Jones Industrial Index having fared relatively well, this is simply a weak U.S. dollar illusion. Once the returns are converted to reflect a common currency such as the U.S. dollar or euro, the situation changes completely and the U.S. markets are right in the thick of the declines.

Furthermore, the previous conclusion of global economies decoupling from the U.S. remaining a myth is still as applicable as before. The bottom line: In times of crisis, correlations between stock markets increase and there is nowhere to hide.