Thursday, January 2, 2020

US equities makes massive gains in 2019; dollar looks likely to remain on a bearish trend in 2020

Tags
  • China
  • Dollar
  • Gold
  • Stocks

01022020a

Market Recap: US equities makes massive gains in 2019; dollar looks likely to remain on a bearish trend in 2020

Wall Street's S&P500 and Nasdaq ended 2019 with its biggest annual returns since 2013, while the DJIA's yearly gains was the highest since 2017. The massive gains in 2019 can be attributed to renewed trade optimism towards the end of the year, the three rate cuts from the Fed and an improving economic outlook.

Indexes Yearly Change (%) Net Change Closing Price
Dow Jones 22.24% 5192.20 28,538.44
S&P500 28.71% 720.75 3,230.78
Nasdaq 34.60% 2306.67 8,972.60
FTSE100 12.00% 808.21 7,542.44
Euro Stoxx 25.12% 751.97 3,745.15
Nikkei 18.20% 3641.85 23,656.62
KOSPI 9.34% 187.67 2,176.84
ASX200 20.27% 1126.35 6,681.50
Hang Seng 12.17% 3059.40 28,189.75
Straits Times 6.05% 183.94 3,227.96
*Source: Bloomberg

But the deescalating risk in both trade relations and economic slowdown wiped the dollar’s gains in 2019. The improving US-China trade relations and global economic outlook pushed investors towards more risky assets and away from the safe haven aspect of the dollar. The declining dollar is also a sign that there is increasing market sentiment that risk will continue to decline in 2020.

01022020b

Gold reached its highest since late September 2019 thanks to the weaker dollar and posted its biggest yearly gain since 2010, rising more than 18% in 2019. The yen also strengthened against the greenback. US Treasury also posted handsome returns in 2019, with longer maturity treasuries leading gains. 30-year bonds returned 17.15% while 10-year treasuries returned 9.03%.

Safe Haven Assets Yearly Change (%) Net Change Closing Price
Gold 18.11% 232.68 1,519.51
Silver 15.02% 2.33 17.89
JPY 0.25% 0.27 108.69
*Source: Bloomberg
US Treasury yields Daily Change (bps) Yield (%)
2-Year 0 1.57%
10-Year 4 1.92%
30-Year 6 2.39%
*Source: Bloomberg

Meanwhile in Asia, the Nikkei, KOSPI, Hang Seng and Straits Times Index posted moderate gains in 2019. But the CSI300 and ASX200 Indices posted massive gains. The CSI300 Index gained 37.95% in 2019, its highest annual gain since 2014 and the ASX200 made its largest yearly returns since 2009.

Asian stocks look mixed in the morning of the first trading day in 2020, even after US President Donald Trump said on December 31st 2019 that the US-China phase one trade agreement is set to be signed on January 15th 2020. The KOSPI and Straits Times Index started the day 0.16% and 0.24% higher.

Asia Daily Change (%) Net Change Last Price As of (GMT +8)
KOSPI Index -0.95% -20.83 2,176.84 9:33:40 AM
ASX200 Index -0.04% -2.60 6,681.50 9:33:36 AM
Straits Times Index 0.16% 5.13 3,227.96 9:18:41 AM
*Source: Bloomberg

Look out for final revisions from Markit to its Manufacturing PMI for Germany, the EU, the UK and the US today. Jobless claims in the US is set to be announced at 9.30pm (GMT +8) later today as well.