December 2019

• Global markets ended 2019 strongly as improving trade relations, accommodative central bank policies and resilient economic growth supported investor confidence.
• U.S. equities closed the year at record highs following the signing of a preliminary U.S.-China “Phase One” trade agreement.
• European and Asian markets benefited from reduced geopolitical uncertainty and supportive liquidity conditions.
• Emerging markets outperformed as investor appetite for risk assets strengthened heading into 2020.
• Bond yields remained relatively stable after significant declines earlier in the year.
• Commodity prices ended the year on a firm note, particularly oil and industrial metals.

Asia (ex. Japan)

Asian markets outside Japan finished 2019 strongly as investor optimism improved following the announcement of the “Phase One” trade agreement between the United States and China. Chinese economic conditions showed tentative signs of stabilisation after months of fiscal and monetary support.

Technology-focused markets such as Taiwan and South Korea continued outperforming due to recovering semiconductor demand and improving export expectations. India also advanced as lower interest rates and government stimulus measures supported domestic growth conditions.

Europe

European equities advanced during December as reduced trade tensions and supportive European Central Bank policies continued improving investor sentiment. Economic data remained relatively subdued overall, though recession fears eased significantly compared with earlier in the year.

Political uncertainty surrounding Brexit also declined after the UK general election delivered a clear parliamentary majority, improving expectations for greater political stability heading into 2020.

United States

U.S. equities reached further record highs during December as investors welcomed progress in trade negotiations and continued resilience in the domestic economy. Technology and consumer sectors remained among the strongest performers throughout the year-end rally.

The Federal Reserve maintained interest rates unchanged after cutting rates three times during 2019. Employment conditions remained strong, while consumer spending continued driving economic growth despite weaker manufacturing activity.

United Kingdom

UK equities delivered positive performance during December as the decisive general election result reduced immediate political uncertainty surrounding Brexit. Sterling strengthened significantly following the election outcome.

Business confidence improved modestly as investors anticipated greater clarity regarding future trade negotiations with the European Union. The Bank of England maintained its cautious policy stance amid mixed economic indicators.

Japan

Japanese equities advanced strongly during December as improving global trade sentiment and stable yen conditions supported exporters and cyclical sectors.

The Bank of Japan maintained highly accommodative monetary policies while continuing to support financial conditions and economic activity amid relatively subdued inflation.

Emerging Markets

Emerging markets ended the year strongly as improving trade conditions, lower global interest rates and stable commodity prices encouraged investor inflows into higher-risk assets.

Asian emerging markets led gains due to stronger technology demand and stabilising Chinese growth, while commodity-exporting economies also benefited from improving global growth expectations.

Commodities

Commodity prices ended 2019 on a relatively firm note. Oil prices strengthened modestly due to improving demand expectations and continued OPEC production discipline.

Industrial metals advanced alongside improving trade optimism and manufacturing sentiment, while gold prices remained elevated despite stronger equity markets due to persistently low global bond yields.