7 Graphs that Explain Financial Markets in 2015

2015 was a year when major asset classes such as US stocks and investment grade bonds were flat. Yet as the US economy continued to chug along amid a weak global economy, some investments were major success stories while others were big disappointments. Here are seven graphs that explain the key movements in financial markets during the past year:

1. Consumer discretionary stocks rose while energy stocks tanked

Stock_Sectors-2

While US stocks overall ended the year right back where they started, there was a lot of variation in the performance of different market sectors. The consumer discretionary sector led the way, powered by a favorable economic environment and a strong performance by Amazon, the sector’s largest company. The energy sector was the worst performer for the second year in a row.

2. Commodities had a rough year

Commodities-1

The cause of the energy sector’s troubles was falling commodity prices. Commodity prices fell across the board, but energy commodities (such as oil) were hit the hardest.

3. Greece was nearly forced to leave the euro zone

Greece-1

After the Syriza party was elected in Greece, the country flirted with an exit from the euro zone. Greece eventually reached an agreement with its European creditors, but the Greek economy suffered and the country’s stock market ended up falling by around 40% over the course of the year. European stocks overall were largely able to shrug off Greece’s woes and ended the year only slightly down.

4. Chinese stocks went on a wild ride

China

China’s stock market showed signs of a bubble, surging in the early part of the year and then subsequently plunging. The so called “H-shares” of Chinese companies listed in Hong Kong, which are the ones typically owned by US investors, were less volatile than the “A shares” of Chinese companies listed in mainland China.

5. Emerging markets continued to struggle

EM_Stocks

The commodity price collapse, China’s market mayhem, and economic struggles in countries such as Brazil caused emerging market stocks to fall by more than 15%. Emerging markets have substantially underperformed global stocks overall in four out of the last five years.

6. Growth outperformed value

Growth_Value-1

Growth stocks (faster-growing companies that tend to have high stock prices relative to the fundamentals of their businesses) rose while value stocks (which are slower-growing companies that tend to have low stock prices relative to the fundamentals of their businesses) fell. Growth stocks’ success was powered by strong performances by companies such as Amazon, Facebook, and Google.

7. High yield bonds disappointed

High_Yield_Bonds-1

High yield bonds fell for the first year since 2008, arguably making them the most disappointing asset class of 2015. Factors such as fears of increasing defaults by energy companies and the end of the era of near-zero interest rates that had persisted since the financial crisis contributed to high yield’s weakness.