Stocks surge to start the year; 5 Themes for 2020

Summary:

• Strong gains seen in equities

• DE30 - technical overview 

• US100 makes new ATH

• UK Manufacturing PMI remains weak

• 5 Themes for 2020

European equities have made a bright start to the New Year with sizable rallies of more than 1% seen in several of the major benchmarks across the continent. 2019 was a good year on the whole for stock markets and they seem to be wasting little time in attempting to push higher again with the bourses following the lead of their Asian peers which gained overnight. Expectations that a “Phase One” trade deal between the US and China will be signed in less than 2 weeks have boosted sentiment but the main driving force appears to be the announcement of a further easing of monetary policy from China’s central bank.

A technical overview of the DE30 can be viewed here. 

There had been a little bit of weakness in US indices at the end of 2019 with the US500 pulling back, but as had been the case for most of the year, the dip turned out to be a good buying opportunity. The market gapped higher overnight after being closed yesterday, and price has continued to rise and trade just a few points from its record high ahead of the opening bell. The US100 has gone one better and moved above its recent peak to hit a new all-time high. 

The release of a widely followed survey on the UK manufacturing sector has delivered a rather downbeat assessment, with the December PMI reading of 47.5 the 2nd lowest in 7 ½ years. Another sub 50 reading means it is now 8 consecutive months in contractionary territory for this indicator with output, new orders and new export orders all falling sharply. Economic growth last year looks likely to be the worst in almost a decade and while the Conservatives landslide election victory has raised hopes of better times ahead, there is yet to be any real evidence of a pick-up. 

Record markets, lots of politics and central bank intervention – that’s what we had in 2019. How will 2020 look like? In this analysis we point at 5 stories investors should be familiar with.