The Hannover Re share

Stock market environment

The international financial crisis and the ensuing global economic crisis continued to leave the world's stock markets in a tense state during the early months of 2009. The abrupt slump of around 20% in global trade caused a contraction in output and corresponding falls in the gross domestic product of many national economies. A string of bad news had pushed leading indices such as the Dow Jones, Nikkei and DAX down by around 20% by early March.

Yet the broad range of support measures and interest rate cuts initiated by central banks in the previous year as well as the bank rescue funds and economic stimulus packages launched by numerous governments started to have an effect: the financial sector began to stabilise, while the first pieces of good news and optimistic sentiment indicators brought about a trend reversal on equity markets towards the end of March. By the end of the first half-year most stock market indices had regained or even surpassed their levels at the opening of the year. Stock exchanges in many emerging countries enjoyed particularly marked surges.

Thanks to improved economic data the recovery was sustained into the second half-year. By year-end the Dow Jones and the Nikkei had climbed by 22% and 19% respectively relative to the start of the year. The DAX put on 24% to close the year at 5,975 points. The MDAX performed even better with a gain of 34%.