Highlights from January 2020 – U.S. equities flat but emerging markets fall big; Bonds deliver big returns; Brexit finally happened; Economic Growth slowing; Coronavirus

Not a stellar start for Equities in 2020

2019 was a stellar year for the equity markets, the new year started off well but there was volatility by the end of the month.

U.S. equities led the world with gains of 31% of 2019, closely followed by Europe at 27%. The MSCI World Index was up a staggering 28% in 2019. January saw the S&P 500 flat (well down 0.02% to be precise), the Japanese TOPIX was down 2.1% and MSCI Emerging Markets index was down 4.7% during the month.


Bonds deliver big

Continuing with great returns in 2019, government bond yields again fell during the month. UK delivered the best returns. The 30-year UK government bond yield fell from 1.33% to 1.03% delivering a 3.8% return on an aggregate UK government bond index. Italian bonds delivered a return a 3.4% followed by U.S. bonds at 2.6%.

Negative yields ahead for everyone? Highly likely, central bankers seem to like the idea …


Brexit finally happened

The UK officially exited the European Union on the 31st of January. The transition period is currently set until the end of 2020. Will it be extended? We think it will. (Related: The Real Economics of Brexit)


Economic growth slows

Provisional Q4 GDP growth numbers show slowing growth for the U.S. (2.1%) and the Eurozone (just 0.1%). Oil prices and shipping rates are falling quickly, the markets are factoring much slower growth ahead …



A new SARS like virus (broadly classed as coronavirus) seems to be spreading quickly in China. At the end of January, there were about 9,500 cases and 300 deaths. Compare that to the 2003 SARS outbreak that saw about 8,000 infections with about 750 deaths. The outbreak in 2003 caused major travel disruptions in Asia, given the early trajectory, this time it will be very different – the virus is spreading more quicker albeit currently localized to China but then China has 15 times more international flights than it did in 2003 …

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