The Dutch stock exchange jumped to more than 450 points after the QE announcement by the European Central Bank, the highest level since 2008. It is a remarkable rise, considering the fact that the stock market dropped below 400 points just a month ago! A ten percent rally over such a short period of time sounds impressive, but at the same time the euro dropped in value against the dollar. Was it just an exchange rate effect? Or did stocks also rally versus gold and oil? Marketupdate collected some data and made the following graph. The ratios are expressed as an index: 100 equals the valuations and ratios in September 1999. Click on the graph for a full screen version!

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Dutch stock market in dollars, oil and gold

  • Dutch stock exchange went down in dollars: The positive vibe in the Dutch stock exchange is overdone if you consider the exchange rate effect. While the stock market went up in euro (green line), it went down measured in dollars (blue line)!
  • Dutch stock market neutral in gold: When measured in gold, the Dutch stock market literally went nowhere over the past couple of months. A more positive explanation is that both went up at about the same rate. But if we look back all the way to 1999, we have to conclude that stocks lost quite some value against gold.
  • Oil is getting cheaper: The price of oil has been cut in half in less than six months, a trend which is clearly visible in this graph. While the ratio between stocks and gold remained stable, the value of stocks doubled when measured in oil. Since 1999, gold and oil traded within a narrow rage for most of the time, but something definitely changed in the last couple of months. During the last OPEC meeting, the oil producing countries decided to maintain full oil production. Earlier, during a G-20 meeting, both Saudi Arabia and Russia argued against using oil and gas as a political instrument. Since then, oil prices fell to the current cost of production.