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Analytics, 19 January 2020

Bullish Action or Recession? The Market in 2020.

2019 was an exciting year for the markets as major assets across the world posted their best annual performance of the decade. Though this had some experts suggesting a recession in the coming months, 2020 is likely to be another good year.

Several factors and major events come to mind when analysing possible market movements in 2020. The years drives include geopolitics, including the oscillating US – China trade war, the US-Iran tussle; the US elections amongst others. It is however fair to note that despite most of these issues, 2019 bloomed, and it is excusable to be optimistic as a result.

There have been suggestions that stocks outside the US will have a big financial year as compared to US equities. According to an article by CNBC, a consistently good US stock market over the last decade as compared to the rest of the world widened a gap between US equities and equities from the rest of the world. The global slowdown seems to have bottomed out whilst measures of manufacturing and global trade have slowed in recent months.

Wall Street has not shied-off from voicing its optimism for the year. In its annual Round Table of Wall Street’s best minds, held every January, Barron’s veteran investors and economists who convened in New York on January 6, though cautious in their view, were optimistic that there was almost no chance for a recession following the excellent 2019 financial year. This supports the theory by John S. Tobey of Investment Directions, who writing on Forbes, maintained that the overriding forces like geopolitics, war, impeachment of the US president, institutional action and trade wars don’t ride the US stock market anymore, Capitalism does.

Financial institutions also see positive prospects in 2020, though most such as JPMorgan Chase remain mindful of the potential risks that may arise in the second half of the year.

Although understandable, most banks and wealth managers have been either modest in their expectations, or generally lean on advising their clients to manage their risks and expectations. They expect investors to earn much less than in 2019, with the double-digit returns of 2019 unlikely to repeat.

What do you think is the fate of the financial markets in 2020?

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