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Volatility on the financial markets has fallen significantly and investors are very calm. Current sensitive issues such as the unfinished trade talks, the unrest in Hong Kong or the still weak global economy hardly lead to nervousness. Market players are optimistic because they expect growth to recover over the next few quarters with the help of lower interest rates and a potential trade deal, thus returning corporate earnings to their path of growth. Yet there are already initial signs of renewed economic momentum: at 2.1%, for example, US economic growth in the third quarter was stronger than expected. Data from the housing market and retail trade also exceeded expectations. In the euro zone, France and Germany surprised with better GDP figures. Contrary to all forecasts, Germany's economy grew by 0.1% in the third quarter thanks to private consumption and government spending, thus preventing a recession. After the planned elections in England on December 12, it will become clear whether Boris Johnson will reach a conservative majority to finally lead the country out of the EU after more than three years. Positive news mainly drove the trade dispute. According to reports, the US will have to postpone the planned tariff increases on 15 December and the Chinese have announced steps to protect intellectual property.

Stock markets

Equities rose on the leading exchanges across the world during a very quiet period for trading. The US equity indices as well as the European stock markets made significant gains once again. Cyclical sectors are contributing the bulk of the winners at present. The rosier prospects for growth have enabled both the Russell 2000 Index (US small and mid-caps) and the Dow Jones Transportation Index to put in a fairly strong performance in recent times. 2019 is a pre-election year in the US, which traditionally means a favourable stock market trend, even in December. Only four weeks of trading remain before the end of the year, and this could put more pressure on investors, who are still adopting a very defensive stance due to the political uncertainties. The US presidential elections will follow in 2020. These years also tend to be positive for equities, assuming the current incumbent wins (see Focus).

Interest rates

Yields on the most important government bonds again showed a slight upward trend. Exceptions are Switzerland, Australia and China, where interest rates have remained unchanged or even fell. In Australia, a very disappointing labour market report was the trigger for lower interest rates, while China continues to report disappointing economic figures due to the consequences of the trade dispute.


There were no major movements in the G10 currencies either. The Australian dollar came under pressure for a time as a result of the country’s weak labour market data. The sterling gained 1.3% in the run-up to the general election and the hope it brings for an orderly Brexit. Precious metals lost ground on the back of investor caution and a slightly stronger US dollar, with gold shedding -3% and silver -6%. Meanwhile, the oil price rose by 1.8%.


We remain in a constructive mood as we enter the final four trading weeks of the year. The latest developments in the trade dispute, the first signs of an economic recovery – including now from China too – and the monetary and fiscal policy measures being taken will maintain the current bull run on the stock markets and may even boost it further. Seasonality is also positive for the equity markets for the rest of the year. An election year is generally positive for the US markets as long as the incumbent is re-elected. Although the market could consolidate in the short term, we are not expecting any major setbacks. As hedging costs are very low, we have hedged some of our risks on favourable terms once again following the strong November.


Focus November 2019Market Forecaste November 2019