Weak start to the Year of the Goat for stocks
10 February 2003
One week into the Chinese Year of the Goat, stock markets around the world continue to suffer from war-related fears. Tokyo and London managed to eke out small gains over the week, but the rest of the world's stock markets mostly went down, led by the US.
| Market | Index | Close on 7 Feb | Week gain/loss % | |
| New York | S&P 500 | 829.69 | -3.0 | |
| Tokyo | Nikkei 225 | 8448.16 | 1.3 | |
| London | FTSE 100 | 3599.2 | 0.9 | |
| Sydney | All Ordinaries | 2886.1 | -1.7 | |
| Hong Kong | Hang Seng | 9150.95 | -1.2 | |
| Singapore | Straits Times | 1285.41 | -0.5 | |
As if the political crisis over Iraq was not enough, the mood in the US was almost certainly made worse by the Columbia space shuttle disaster. That disaster adds another dent to American self-confidence, and in an area – technology – where the US had long assumed unchallenged leadership.
One piece of good news for the week, though, was the improved jobless rate in the US. That fell to a four-month low of 5.7 percent in January from 6 percent in December. Retail employment climbed 101,000, recovering from December's drop of 99,000. However, factory jobs fell by 16,000.
The jobless report did not stop the US market from falling for a fourth successive week, the longest weekly losing streak since October last year.
Most years that correspond to the Year of the Goat have been good years for the stock market. Just look at the table below. It shows the total return for the S&P 500 – that is, inclusive of dividends – in the last three Years of the Goat (the years over which the returns are calculated are for the international year, not the Chinese year).
| Year | S&P 500 |
Average
annual total return
|
|||
| 1991 | 30.5 % | 14.1 % |
6.3 % |
||
| 1979 | 18.4 % | 7.0 % |
15.2 % |
||
| 1967 | 24.0 % | 5.6 % |
1.9 % |
||
Not only have these years produced good total returns, they have also produced good returns relative to preceding and succeeding years. In other words, they are years in which the stock market performs above its longer secular trend.
So perhaps there is something for equity investors to look forward to this year. Just remember, though, the experience back at the start of the Depression of the 1930s. In 1931, the appearance of the Goat that year did not stop the stock market from falling by almost half.
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