Wednesday, 1 January 2020

World equity markets

It was a bullish month for most world equity markets, with net monthly changes ranging from +7.7% (Russia), +6.8% (Brazil), +6.2% (China), +2.1% (Spain), +1.7% (USA, Greece), +1.6% (Japan), +1.2% (France), +0.1% (Germany), to -2.1 % (Australia).

For the year, net gains ranged from +51.8% (Greece), +45.3% (Russia), +31.6% (Brazil), +26.4% (France), +25.5% (Germany), +22.3% (USA, China), +19.1% (Australia), +18.2% (Japan), to +12.4% (Spain).

For the decade, net changes ranged from +173.7% (USA), +124.3% (Japan), +122.4% (Germany), +68.6% (Brazil), +51.9% (France), +39.2% (Australia), +7.2% (Russia), -6.9% (China), -20.0% (Spain), to -58.3% (Greece).

Lets take our regular look at ten of the world equity markets

USA - Dow

The mighty Dow ended the year on a positive note, net higher by 487pts (1.7%) to 28538, having printed a new historic high of 28701. For the year, the Dow gained +22.3%, and a monstrous decadal gain of +173.7%.

Note the macd (green bar histogram) cycle, as price momentum increasingly favours the bulls. RSI 67s are the highest since late 2018. Next key target is psy'30k, and then Fibonacci of 34430, the latter of which appears viable in late 2020.

Germany – DAX

German equities climbed for a fourth consecutive month, with the DAX settling +12pts (0.1%) at 13249. For the year, a gain of +25.5%, and the decade, +122.4%. It remains the case that negative rates from the ECB continue to destroy the German/EU financials, whilst renewed QE is helping to juice asset prices upward.

It would seem likely that the German govt' will initiate some kind of fiscal stimulus in 2020. Whilst equities will react favourably, such deficit spending will rile up those who are still concerned about an eventual return of 'Weimer' inflation.

Japan – Nikkei

The Nikkei climbed for a fourth consecutive month, the 9th gain of 12, settling +362pts (1.6%) at 23656. For the year, a net gain of 18.2%, and a decadal gain of 124.3%. However, the Japanese market is still far below its Jan'1990 historic high of 38915. The BoJ can be expected to keep rates low, with the printers to spin across the decade.

China – Shanghai comp'

The Chinese market rebounded into year end by 178pts (6.2%) to 3050. For the year... a net gain of +22.3%, and a net decadal decline of -6.9%. China appears poised to sign phase'1 of a US/China trade deal at the Whitehouse, Jan'15th.

Brazil – Bovespa

A fourth month higher, settling +7412pts (6.8%) to 115645, having broken a new historic high of 117802. For the year, a net gain of +31.6%, and a decadal gain of +68.6%. RSI 80s, the highest since 2007.

Russia - RTSI

A fourth month higher, with the RTSI settling +110pts (7.7%) to 1548, making a net yearly gain of +45.3%, and a decadal gain of +7.2%. RSI 70, the highest since 2011. Higher energy prices would really help the Russian economy/market.

France – CAC

A fourth consecutive net monthly gain, settling +72pts (1.2%) to 5978. For the year, a net gain of +26.4%, and +51.9% for the decade. It will be interesting to see how France deals with the UK leaving the EU (whenever that might occur in 2020).

Spain – IBEX

A fourth month higher for Spanish equities, settling +197pts (2.1%) to 9549. For the year, a net gain of +12.4%. For the decade, a very ugly net decline of -20.0%. Spain remains a fractured country, and underlying geo-political issues - such as Catalonia, will eventually re-surface.

Australia – AORD

Australian equities struggled into end year, settling -145pts (2.1%) to 6802. For the year, a net gain of +19.1%, and a decadal gain of +39.2%. Higher commodity prices would really help this economy/market.

Greece - Athex

Greek equities settled +15pts (1.7%) to 916. For the year, a monstrous gain of +51.8%, but that still made for a horrific net decadal decline of -58.3%. The Greek market is a reminder that some parts of Europe never recovered from the Great Financial Crisis.


Nine markets were net higher for December, with one net lower. Russia and Brazil lead the way higher, whilst Germany and Australia lagged. The USA and Brazil broke new historic highs. All ten markets settled the month/year above their respective monthly 10MA.

All ten markets saw net 2019 gains. Greece and Russia lead the way higher, whilst Japan and Spain lagged.

For the decade, seven markets saw net gains, with three net lower. The USA, Japan, and Germany lead the way higher, whilst China, Spain, and Greece saw net declines.

Final note

The past decade saw the world economy struggle to recover from the great financial crisis. Central banks kept rates at emergency low, and even negative levels. Further, there was massive QE, which helped to juice most asset classes.

It is indeed the case that low/negative rates and QE continue, as the political and banking elite recognise that 'not all is not well', even though they would like to present otherwise.

The new decade underway is going to be tough. The central banks have created an 'everything bubble', and they surely know that if it pops, it'll be even more devastating than the carnage of 2007/09.

I expect rates to remain broadly low, with increasing amounts of QE. Despite existing government debt, it would seem some governments will increase spending to try to boost the economy. Again, that just papers over the underlying structural problems.

I would look to commodity prices. Gold certainly looks headed for new historic highs, whether by end 2020, or in 2021. Silver and copper could be expected to follow. The wild card is arguably oil. Any further upside in energy prices would be a significant negative pressure on the world economy.

Regardless of the economy, we can expect further massive development in technology. We should see a massive push toward all electric, fully autonomous vehicles. A personal inspiration is likely to come via Space, as NASA, SpaceX, Blue Origin, Virgin Galactic, and hopefully others, explore outward, and build permanent bases on both the Moon and Mars.

I've been regularly posting for almost eight years. The thought of another ten is rather daunting, but I'll try. Eventually, I hope to do regular web streaming... if only to speak, and ease off on the typing.

Sincerely... happy new year, and good wishes for the decade.

Yours... PD, aka... Philip.

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*the next post on this page will likely appear 5pm EDT on Thursday, Jan'2nd 2020