The Italian elections earlier this week supposedly threw the entire world's markets into a panic, driving the S&P 500 down by 27.75 points on Monday alone. Italy seemed poised to elect several anti-austerity candidates, but the bigger problem was the government appeared to become even more fractured than it already was, making political and economic gridlock an almost certainty.
The fallout in the American stock markets reminded all of us that the problems in the Eurozone are a long way from being solved. It's a bit scary that an election — not a policy decision or an economic crisis erupting, but simply the outcome of an election — could have such wide-ranging effects on the global economy. That points up how precarious the financial situation in the European Union remains.
But what many people have not noticed is that, in spite of the considerable debt issues that still remain, the European Union is doing fairly well as an economic entity, at least so far as its markets are concerned. Here is a look at how various EU markets have done over the past year (all returns are as of Tuesday, February 26); the biggest winner may surprise you.
Spain (IBEX 35 Index): Down 6.4 percent over the past year
The biggest stock on the IBEX 35, the Spanish telecom Telefonica, has had a terrible year, dropping nearly 20 percent in the past 12 months. Since it account for more than 20 percent of the index, that presents a big hurdle to overcome. The second-biggest stock on the index, Banco Santander, has had a better time of it. Although, with a 12-month increase of just 1.23 percent, it pales next to the performance of America's financial sector.
Italy (FTSE MIB Index): Down 5.7 percent
Some big names had big years in Italy: Parmalat up nearly 15 percent, Pirelli up 13 percent. The medical diagnostic firm DiaSorin rose a molto bene 27 percent. But the financial sector continues to struggle. Banco Popolare and Banca Popolare dell'Emilia Romagna were both down about 10 percent. Perhaps the biggest pratfall of all, though, was taken by the utility A2A, which lost 44 percent of its value over the past year.
Netherlands (AEX Index): Up 3.2 percent
Plenty of Dutch stocks had big showings this year. The publisher and information provider Reed Elsevier, best known in the United States for its subsidiary LexisNexis, was up by 28 percent. ASML, which makes the machines that make semiconductors, rose by a whopping 92 percent. But maybe the most iconic Dutch stock, Royal Dutch Shell, was off 5 percent on the year.
France (CAC 40 Index): Up 5.2 percent
Lafarge, the world's largest cement manufacturer, and Safran, an aerospace and defense contractor, both rose a spectacular 44 percent over the past 12 months. Credit Agricole was up 49 percent. But the security company Gemalto did them even better, rising by 63 percent. These winners were dragged down by the likes of gas distributor GDF Suez (down 22 percent) and the construction firm Bougues (down 14 percent).
