Kristal Weekly Feed I 30th December 2019

Had a busy week? Missed out on the latest news in the financial world? Here’s a short summary of some major global headlines over the last week.

Positives

• U.S. stocks climb higher in Santa Claus rally
• European stocks hit record highs as investors follow optimism on Wall Street
• Asian shares hit an 18-month high

Negatives

• UK economy faces the weakest growth outside a recession since the Second World War

Now, for more detail.

Positives

1. U.S. stocks climb higher in Santa Claus rally

What You Should Know

All three major indexes closed at record highs this week due to optimism in the markets. The Nasdaq Composite closed at a record high of 9022.39 – its longest winning streak since July 1997, the S&P 500 closed at 3239.91, and the Dow Jones Industrial Average closed at 28621.39. Recent comments by Trump and Chinese officials have contributed to the festive cheer, leading to a boost in the overall investor sentiment.

What You Should Look Out For

While a year-end rally is usually expected, the optimism due to developments on the trade talks between China and the US has contributed to a record rally this year. With Trump announcing a possible signing ceremony of the partial trade resolution in January, markets can respond strongly to any news on that front. With stocks generally performing well in January (the January Effect), investors can expect some good rallies in the coming month.

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2. European stocks hit record highs as investors follow optimism on Wall Street

What You Should Know

The Santa Claus rally in the US market rubbed off on its European counterpart too. The FTSE 100 and the German DAX closed 0.2 percent higher while the French CAC closed 0.3 percent higher. The Stoxx Europe 600 Index reached record highs and closed 0.2 percent higher.

What You Should Look Out For

While this rally was primarily driven by the developments in the US-China trade talks, developments on Brexit will also have a major impact on the market performance next month. If you are invested in European stocks, then you need to keep a tab on any changes on both these fronts.

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3. Asian shares hit an 18-month high

What You Should Know

In a short trading week, the Asian markets closed at a record high with oil prices staying buoyant. The MSCI Asia Pacific ex-Japan Index gained 0.7% and closed at a record high of 555.42. Japan’s Nikkei closed at an overall gain of 19% this year. Chinese shares were also upbeat after the US and Chinese authorities declared the possibility of signing a partial trade agreement in January.

What You Should Look Out For

As traders returned from the Christmas and Boxing Day breaks, the news of China and the US being in contact to finalize the initial trade agreement was welcomed with great cheer. As the global stocks rallied, oil and gold also held on to their recent gains. Keep an eye open for the fourth-quarter earnings reports in January to gauge the sentiment among corporates as it will help you understand if the optimistic investor sentiment translates into economic growth.

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Negatives

1. UK economy faces the weakest growth outside a recession since the Second World War

What You Should Know

This has been a year of political chaos and Brexit-driven economic uncertainty in the UK. In fact, many experts believe that the UK economy is facing the slowest growth period outside a recession since World War II. The Bank of England has forecasted a growth of 0.1 percent in the fourth quarter. However, the complex trade talks with Brussels next year might cause a strain on the UK’s economy.

What You Should Look Out For

While Boris Johnson’s victory has the potential to boost activity levels of companies and support stronger economic growth, the uncertainty around the trade deal with the EU can hold back growth in 2020. It is important to stay tuned with the political and economic developments in the EU to assess the expected growth next year.

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