January Market Commentary

December was the month that cemented what has been a very good year for world stock markets. We report on 11 major markets in this Bulletin: all of them ended the year higher than they began it – with several markets making significant gains. No markets fell in December, although one or two did shuffle sideways somewhat. Let’s look at all the details.

2019 was broadly a gloomy tale for the UK high street and we look forward to hearing how Sajid Javid’s first Budget intends to help it compete with online shopping.

Bucking the trend was pub chain Wetherspoons with the announcement it would invest £200m over the next four years and create 10,000 jobs. Dunelm also announced that it expects to beat its original profit forecasts for the year – although it did credit ‘strong online performance’ for much of the good news.

The CBI forecast that growth in the UK will slow to 1.2% this year despite the Brexit deal, but will then pick up to 1.8% in 2021.

The employment rate is now at an all-time high of 76.2% with a total of 32.8m people employed in the UK. Unemployment fell to 1.28m, the lowest figure since January 1975.

The FTSE 100 rose 3% in December to end the year at 7,542, an overall increase of 12% over the year. The pound closed the year at $1.3246, up by 2% in December and up by 4% for the year as a whole.

While Germany didn’t technically go into recession in 2019, there continue to be plenty of worrying signs.

Figures released for October showed that Germany had suffered a ‘disastrous’ fall in factory production, with output down 1.7% – well below expectations. The drop, which came from lower production of heavy machinery and capital goods, was the biggest fall in factory output since November 2009.

In company news, Fiat-Chrysler and Peugeot-maker PSA agreed a $50bn (£37.5bn) mega-merger to create the world’s fourth-largest car maker. The newly combined companies believe they can achieve $4bn (£3bn) of savings through combining purchasing agreements and technologies.

The German market was virtually unchanged at 13,249 while the French market was up 1% to 5,978. However, taking the year as a whole, both countries’ markets enjoyed very good years, with the German DAX index up by 25% in 2019 while the French market rose 26%.

Pride of place, though, goes to Greece: for once it was nothing but good news as the Athens stock market enjoyed a very successful year, finishing up 50% at 917.

Jobs figures at the beginning of the month will have pleased the President going into an election year. The US economy added 266,000 jobs in November, the highest figure for 10 months, and saw the unemployment rate drop to 3.5%.

Cyber Monday on 2nd December was expected to deliver record US sales and it didn’t disappoint, with consumers spending $9.4bn (£7.1bn). That was well up on the $7.9bn (£6bn) spent in 2018 and cannot do anything other than impact on traditional shopping outlets.

The Dow Jones index closed December up 2% at 28,538. Having started 2019 at 23,327, it was up by 22% for the year as a whole and – as we’re sure you’ll hear the President point out in the election campaign – it is up by 44% from Inauguration Day 2017.

Far East
Chinese exporters will certainly be hoping for a settlement to the trade dispute as figures released in December showed exports had fallen for a fourth straight month. Exports in November were down 1.1% on a year previously, with exports to the US down by a whopping 23%.

Hong Kong’s Hang Seng index does appear to have survived the bite of winter: along with other markets in the region it was up in December, rising 7% to close the month at 28,190. China’s Shanghai Composite index rose 6% to 3,050, while the South Korean market rose by 5% to 2,198. The Japanese index enjoyed a more modest month, but was still up by 2% to 23,657.

For the year as a whole, China led the way with a 22% rise, followed by Japan’s Nikkei Dow index which rose 18%. Despite the protests, Hong Kong was up by 9% in 2019: the South Korean market brought up the rear with a rise of just 8%.

Emerging Markets
Saudi Aramco, made its debut on the Riyadh stock market with investors paying $25.6bn (£19.4bn) for a 1.5% stake in the company, making it the biggest share sale to date.

The Indian stock market was up by just 1% to 41,254, while the Russian market rose 4% to break through the 3,000 barrier and end the year at 3,046. But the Brazilian stock market did even better, up 7% in December to 115,645.

If we look at the year as a whole, Brazil leads the way with a spectacular rise of 32%. The Russian market isn’t far behind, finishing the year up 29%. The Indian stock market enjoyed a much less spectacular – but perfectly acceptable – year, rising by 14% for 2019 as a whole.

And that’s it from 2019! Best wishes for the coming year.

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