The ongoing selling pressure has dragged on global markets, with developed market country-specific exchange traded funds falling off as Japan and Europe dip into a bear market.
British equities are joining other European markets like Germany, France and Spain in a bear market after Wednesday’s 3.5% decline in the FTSE 100 Index, reports Cecile Vannucci for Bloomberg.
The ongoing commodities rout in light of China’s slowdown has dragged on the energy and materials sectors, which account for 17% of the FTSE 100 Index.
“We do not see any lasting potential for these sectors to outperform and believe any recovery might be short-lived,” Christian Stocker, equity strategist at UniCredit, told Reuters. “The trend of earnings estimates is declining strongly, relative valuation versus the overall market is still very high and a lasting trend reversal in commodity prices is not in sight. We recommend remaining underweight on commodity stocks.”
The regional Stoxx Europe 600 index dipped into a bear market last week while German, French and Spanish benchmarks were at least 22% off from their highs.
The iShares MSCI United Kingdom ETF’s (NYSEArca: EWU), the largest U.K.-related ETF listed in the U.S., fell 2.9% Wednesday and declined 29.0% since its mid-May 2015 highs.
Additionally, since the Spring 2015 highs, the iShares MSCI Germany ETF (NYSEArca: EWG) decreased 24.5%, iShares MSCI France ETF (NYSEArca: EWQ) dropped 22.2%, iShares MSCI Spain Capped ETF (NYSEArca: EWP) plunged 49.1% and the broader Vanguard FTSE Europe ETF (NYSEArca: VGK) fell 24.3%.