Stock markets affected by trade wars, Trump's tweets, and monetary policy in 2019

Global market

The trade war between the United States and China has definitely had a global effect on stock markets, not only in the Asia-Pacific and North American regions, but also on other platforms. Because of this, the IMF had to lower its forecasts for global economic growth, as investments in business expansion was declining everywhere.

But despite this, almost all stock markets have shown growth this year. It is worth noting the growth in the profitability of US indices, especially the Nasdaq 100 index of high-tech companies, which added 32,11% for the year. In the European region, the leaders are the German and French exchanges, but the furor was made by the Greek platform, which has soared by more than 43% over the year.

Russia also distinguished itself, with the return on its stock indices adding 28,5%. In Asia, Australia and China have shown a good “performance” with a yield of 22,5% and 17%, respectively.

The main growth driver in global stock markets was the continued easing of the monetary policy of central banks almost all over the world. The most successful sectors varied from exchange to exchange, but it is worth noting the technology sectors and TMT (Technology, Media, Telecom) in general. In short, the year for all is ending on a positive note, the bull is hoofing on almost all major stock markets.

American stock market

In 2019, all major US indices were growing steadily and continued to update historical highs. The reasons for the growth of the American market are the same as all the others: positive news about a possible end of the trade war, further reduction of the Fed rate. Plus, at the end of August, the US regulator began to increase systematically the balance, which added 8,9%: it has grown by $335 billion and now is $4,095 trillion. But the military conflict with Iran has had almost no impact on the US stock market.

Based on this and the general moderately positive macrostatistics, the bullish trend should continue in 2020 as well. The effect of the Fed's monetary policy easing should continue to affect the economy.

If we count a growth of more than 0,5% and a decline of more than 0,4% as significant daily fluctuations in the market, then one of the factors that influenced the US stock indexes, turned out to be... Trump's tweets! The last such case occurred on December 12, when Trump said: “Getting VERY close to a BIG DEAL with China. They want it, and so do we!” — The US stock market rose by 0,8% that day.

S&P500, the index of the largest companies in the United States, has gained more than 25% since the beginning of the year. The technology sector has shown the biggest growth. The growth leaders were large companies with low volatility. For example, Apple has grown by 77% since the beginning of the year and reached a capitalization of more than $1,2 trillion. A large increase was recorded partly because of a low base — the correction at the end of 2018 greatly devalued many assets. There is an opinion that the growth trend will continue, but in a milder form, that is, a similar yield should not be expected.

Russian stock market

The domestic market in 2019 has become one of the world leaders in terms of profitability both in the national currency and in terms of dollars. The Moscow Exchange index (RUB) has added 25% since the beginning of the year, and taking into account the dividend — 35%. The dollar yield is even higher: 40% without dividend, and 50% — total.

The dynamics of the market have been strongly influenced by investment inflows, both private and institutional. The number of accounts of individuals exceeded 3 million, their share in turnover has accounted for 33%. Private investors have bought bonds worth 360 billion rubles this year. The recovery of confidence in the market is also due to the relative stability of the ruble (the ruble even strengthened against the dollar stronger than other world currencies of the emerging countries).

Most of the stocks have shown positive dynamics. The stocks in the energy sector, oil and gas, and finance have increased the most. Due to the rise of 30% of MTS shares, telecom has also shown an impressive growth. Sistema's shares have grown by 90%. Next year, according to our forecasts, the securities of other sectors — in particular, energy, petrochemical, and retail ones — will catch up to positive dynamics.

If we talk about local enterprises, the year promises to be interesting for Nizhnekamskneftekhim and Tatneft.

The first is involved in the implementation of major projects until 2027 for a total amount of about 1 trillion rubles. Tatneft, in turn, plans to further develop the petrochemical sector, which may become an additional growth driver.

Gazprom, Nornickel, and Surgutneftegaz have demonstrated a yield of more than 50% of the blue chips. Among the liquid securities, Alrosa, Mechel, Lenta, RusAl and Magnit have sunk the most. An outflow of customers failed retail, a drop in export sales — Alrosa, and a decrease in the price of products — producers of ferrous metals.

One of the interesting cases of Moscow Exchange last year — a dramatic adventure of Yandex shares. First, they reacted to the news of plans to limit foreign participation sharply with a spectacular 25% collapse. But it all ended well, and by the end of the year the stocks have updated the maximum.

Also, Russia has returned the investment rating from all leading agencies, this has been one of the important factors in the influx of index funds.

In October 2019, the number of Russian companies which shares are traded on the leading US stock exchanges has increased. The listing on Nasdaq has been received by the head structure of Freedom Finance Investment Company — Freedom Holding Corp. This is the first brokerage company from Russia and the CIS, which is traded on this prestigious exchange.

I am sure that the positive will continue next year. Happy New Year and great investments in 2020!