December 2020

• Global markets ended strongly as vaccine rollouts began, additional fiscal stimulus measures were introduced and investor optimism regarding economic recovery increased.
• Equity markets globally reached new highs despite continued pandemic-related disruptions and restrictions.
• Central banks maintained highly accommodative monetary policies and committed to supporting economies through the recovery period.
• Brexit uncertainty eased significantly after the United Kingdom and European Union reached a trade agreement late in the month.
• Emerging markets continued outperforming amid improving global growth expectations and abundant liquidity.
• Commodity prices remained strong, supported by expectations for global reopening during 2021.

Asia (ex. Japan)

Asian markets outside Japan advanced during December as vaccine distribution efforts and continued Chinese economic recovery supported investor sentiment. Chinese manufacturing, exports and industrial production remained particularly strong, reinforcing confidence in regional growth prospects.

Technology-oriented economies such as Taiwan and South Korea continued benefiting from exceptionally strong semiconductor and electronics demand, while broader regional markets gained from improving trade activity and supportive financial conditions.

Europe

European equities advanced during December as investors focused on vaccine deployment programmes and improving recovery expectations for 2021. The agreement on a post-Brexit trade deal between the UK and EU also reduced a major source of political uncertainty.

Although many countries maintained lockdown measures due to rising coronavirus cases, investors remained optimistic that widespread vaccination efforts would allow economic reopening later in the year ahead.

United States

U.S. equities reached further record highs during December as vaccine rollouts began and Congress approved an additional fiscal stimulus package aimed at supporting households and businesses.

The Federal Reserve maintained its highly accommodative policy stance and continued large-scale asset purchases. Technology companies remained market leaders, though cyclical sectors also performed strongly as reopening expectations improved.

United Kingdom

UK equities performed strongly during December as the successful conclusion of Brexit trade negotiations significantly reduced political uncertainty for investors and businesses.

Despite continued pandemic restrictions and economic disruption, investor sentiment improved sharply following the trade agreement announcement and the commencement of vaccine distribution across the country.

Japan

Japanese equities advanced during December as exporters benefited from improving global trade conditions and strong Asian demand. Investor confidence remained supported by vaccine optimism and accommodative policy settings.

The Bank of Japan maintained extensive monetary support measures while policymakers prepared additional fiscal initiatives aimed at sustaining economic recovery.

Emerging Markets

Emerging markets continued outperforming during December as improving global growth expectations, vaccine optimism and weaker dollar conditions supported strong capital inflows.

Asian emerging economies remained particularly strong due to robust export activity and successful economic recovery trends, while commodity exporters benefited from rising energy and industrial metals prices.

Commodities

Commodity prices remained firm during December as investors anticipated stronger global demand conditions during 2021. Oil prices continued recovering due to improving mobility expectations and ongoing supply discipline among major producers.

Industrial metals advanced further due to infrastructure spending expectations and strong Chinese manufacturing demand, while gold prices stabilised following earlier declines amid balanced risk sentiment and continued monetary stimulus.