Good Year, Bad Decade for Europe

On December 29, 2009, the Stoxx 600 hit its highest level in 15 months, positioning the European equity market index for a strong 2010. It was helped along, of course, by infusions from U.S. and European governments. Emmanuel Soupre, who contributes to the management of $15.6 billion at Neuflize OBC in Paris, tells Bloomberg News, "There was the conviction that governments weren't going to abandon the economy." He continues, "What lifted the market was the idea that we no longer spoke of a depression, but only a recession. When we saw depressive forces countered by government and central bank support, that helped the market to take off."

Nonetheless, 2009 wasn't enough to rewrite the book on the first decade of the new millennium. The Stoxx 600 is off 33% over the past 10 years. It would have been worse, if not for its performance last year, especially in April, when it gained 13%. The effect was due in large part to unexpectedly positive earnings reports from Citigroup (C) and Goldman Sachs (GS).

The national benchmark indexes in Europe turned in a strong 2009, with all western European markets, except Iceland, increasing. The small island nation, which pursued its unique brand of Viking finance through the structured finance bubble, rode it out with $2.1 billion from the International Monetary Fund to keep the country from defaulting. Norway showed the best performance, picking up 70%, thanks to higher oil prices.

The Stoxx 600 outperformed the S&P 500 (up 23%), the German DAX (up 24%), the French CAC 40 (up 22%) and the FTSE 100 (up 22%). But, the FTSE 100 was the first equity market in the developed world to recover its post-Lehman Brothers losses, thanks to its December 29, 2009, results. Hong Kong, Norway, Portugal, Singapore, Spain and Sweden are the only other equity markets to have recovered from the depths of September 2008.