12 / 19


The global stock markets were even stronger in December, crowning an exceptionally good year 2019 (see FOCUS). The uncertainty that had dominated for months with regard to the trading dispute, the BREXIT negotiations and a possible recession gradually evaporated in this extraordinary year. Three interest rate cuts by the US Federal Reserve, the continuing expansionary monetary policy of the Swiss National Bank (SNB), the Bank of Japan (BoJ) and the ECB, a "deal" in the trade dispute between the US and China and an election victory by the Conservative "Tories" in the UK provided the necessary optimism among investors. As already mentioned several times here, the elimination of these uncertainty factors provides the necessary planning security for companies, which should result in rising investments. Leading indicators are increasingly pointing to a recovery in activity data. In addition, the US labor market is also bursting with strength: 266,000 new jobs were created in December, while only 180,000 were expected, and the unemployment rate fell to 3.5%. For the first time in history, the US economy is thus leaving behind it a whole decade without a recession. After virtually every asset class lost value in 2018, almost every asset class was able to increase in value last year.

Stock markets

Thanks to the trading deal and the calming of the protests in Hong Kong, Asian markets gained above average this month. The Hang-Seng Index advanced 7.5%, but has only risen 9.7% since the beginning of the year, well below the other market indices. The Swiss SMI ended a year above the psychological 10,000 point mark for the first time, thus reaching a new all-time high at the same time. Other European markets such as the Euro Stoxx 50 or the French CAC 40 are still well below the all-time highs reached in the noughties of 2000 or 2007 before the major crises (technology bubble & financial crisis). For the American indices, these marks were already history in 2015 (Nasdaq) and 2013 (S&P500). Since then, investors, who were mainly positioned in the US market, have enjoyed a very constant outperformance of the global stock market thanks to the large capitalized technology groups such as Microsoft, Apple, Google or Facebook, among others. Together, the market capitalization of Apple and Microsoft now exceeds the entire German stock market by $250 billion, thus illustrating the "Winner takes it all" effect. Despite their already high capitalisation, these stocks also showed above-average performance in 2019.

Interest rates

Interest rates have fallen significantly for the year as a whole. This was due to initial fears of recession and, consequently, the support measures of the central banks, which caused yields to fall and bond prices to rise. At the end of the year, the maturity yields of 10-year US Treasuries were 77 basis points below the level of the previous year. In Europe, yields in the peripheral countries Italy, Spain, Portugal and Greece in particular fell sharply. For 10-year Greek government bonds, investors are now only demanding 1.4% compensation.

Currencies / Commodities

Against the Swiss franc, the Swedish krona (-7.3%) and the euro (-3.9%) lost most of their value. In contrast, the Canadian dollar (+3.3%) and the British pound (+2.4%) were the clear winners. The precious metals boomed strongly with gold at the top (+18.5%) followed by silver (+15.5%). Even more impressive is the development of the oil price, which rose by more than 30% (WTI) thanks to the OPEC countries' efforts to cut costs and the easing of fears of recession.


Our optimistic assessment was again confirmed in December. Now that the main factors of uncertainty are fading away, we expect improvements in global growth next year, which should have a positive impact on corporate earnings. Interest rates are still the least attractive and equities still appear relatively cheaply valued due to low interest rates. Although the growth cycle is rather advanced after 10 years of recovery, low inflation and the resulting expansionary monetary policy worldwide may extend the moderate growth course even further without systemic incidents. This leaves room for further price gains in the coming year. However, the selectivity of the financial markets is likely to increase significantly again. The choice of sectors and countries and in particular the active management of assets will become much more important.


Focus  Market Forecast