4Q 2019 Market and Economic Overview

Equity markets rose in the final quarter of 2019, the last of the decade, after it became clear that tariffs threatened on Chinese imports from 15 December would not be applied or would be deferred further. The MSCI World Equity Index gained 8.76% over the quarter, with the UK the notable underperformer at 1.8%. The US Federal Reserve had cut interest rates in November. A 'Phase One' trade deal between the US and China, announced around 15 December and not yet signed at the time of writing, was described as almost a non-event because it had been so clearly expected.

In the UK, a Brexit agreement reached with the European Union in October surprised markets and produced large gains for sterling. The Conservative Party won the general election on 12 December by a landslide. Sterling rose almost 8% against the US dollar and 4.7% against the euro over the quarter, ending at 1.32 against the dollar. A weaker US dollar was noted as supportive for emerging market economies.

During 2019, as US-China rhetoric intensified and central banks cut interest rates around the world, investors sought shelter in fixed income, pushing bond prices up and yields down. The rally in bond prices peaked in the third quarter of 2019 and prices retreated somewhat afterwards, though not to the levels at the start of the year. Crude oil rose almost 13% over the quarter to USD 61.06 for WTI, including a rise of more than 10% in December. Gold rose 3% to USD 1,517.30 and reached a 52-week and six-year high in early January.

The S&P 500 Index returned 29% in 2019, of which 2 percentage points came from dividends, 3 from earnings growth and the remainder from higher price-to-earnings ratios. The report also discussed the US-China trade dispute and the US presidential election. Policy rates at the year end were 1.75% in the US, 0.75% in the UK, 0.00% in the euro area and -0.75% in Switzerland.

Important information: This snapshot summarises MWC Group's market commentary for the period shown and is provided for general information only. It is not investment, tax or legal advice, a personal recommendation, or an offer or solicitation to buy or sell any investment, and it does not take account of your personal circumstances. Views and figures reflect conditions at the date of publication and may since have changed. Past performance is not a reliable indicator of future results. The value of investments and any income from them can fall as well as rise, and you may get back less than you invested. Exchange-rate movements can affect returns. Market data comes from third-party sources believed to be reliable, but its accuracy cannot be guaranteed. Please seek personal advice before making any investment decision. Issued by Manentia Wealth Consulting Group AG, Ober Altstadt 18, 6300 Zug, Switzerland.