Weeks from 16 to 29 December 2019
Wall Street hit all-time highs after U.S. Treasury Secretary Steven Mnuchin said an initial U.S.-China trade deal would be signed in early January. Furthermore, data from the Fed showed manufacturing output rose more than expected in November (+1.1%). The S&P500 gained 2.25% in two weeks. The Russell2000 added 1.90%, while the Nasdaq Composite moved up 3.11%, topping 9,000 for the first time. International stocks kept pace with U.S. equities (MSCI World and MSCI EM up 1.95% and 2.92% respectively). The least we can say is that financial markets have shrugged off President Trump’s impeachment process launched by the U.S. House of Representatives.
All sectors without exception finished the Christmas season in positive territory. Real estate (+3.19% over the period), energy (+3.08% as WTI crude oil continued its winning streak jumping above $61.7 a barrel), information technology (+3.07%, boosted by chip stocks) and consumer discreationary (+2.96%) were the best performers, with financials (+0.84%) and industrials (+0.75%) lagging behind.
In the credit space, emerging debt (+1.19% in local currencies) and high yield bonds (+0.70% in the U.S.) outperformed investment grade bonds (+0.14% in the U.S.) while Treasury yields edged up slightly (U.S. 10-year from 1.82% to 1.88%, 10-year Bund from -0.29% to -0.26%).
Lastly, it’s worth noting that gold rose above $1,510 an ounce (+2.59% in two weeks) in the wake of a weaker dollar.