Turbulent year on the stock markets

All indexes caught in the maelstrom of the financial crisis

The stock market year 2008 was shaped by the financial crisis and its effects on the global economy, in particular in the second half of the year. The international financial crisis reached such a level that governments and central banks in leading national economies were forced to agree to extraordinary support measures, including multibillion dollar aid packages, multiple drops in interest rates in quick succession and economic stimulus packages to stabilise the situation. All measures were ultimately aimed at preventing a worldwide collapse of the financial system, securing borrowed capital supply to other sectors and limiting the effects of the financial crisis on economic development around the world as effectively as possible. Due to the uncertainty on so many levels, fears of a recession spread throughout the media, which caused many to withdraw funds from the stock market. In reaction to this, all important indexes collapsed. The US Dow Jones Industrial Average lost 32.7 % from the start of the year and was at a level of 8,776 points at the end of December. The German DAX was at 4,810 points on December 31, 2008 – a drop of 39.5 % over the course of the year. The MDAX, the index for medium-sized public limited companies, in which MLP is also listed, ended the year on 5,601 points – a loss of 43.2 %. The DAXsector Financial Services recorded a massive drop of 59.4 %, which really underlines the severity of the situation for the financial sector in the last stock market year. At the end of the year, markets were all caught in the crossfire between favourable share ratings, poor economic figures and the profit warnings linked to this in many sectors of the economy.

The following chart shows the development of the various stock indexes.