Shares continued to rise

During the month as a whole, the American S&P 500 Index rose by 3.6 per cent measured in USD, while the European Stoxx 600 Index increased by 2.9 per cent measured in EUR and the Nordic VINX Index climbed 1.8 per cent measured in NOK. In Norway, the Oslo Stock Exchange (OSEBX) rose by 0.5 per cent.

Better manufacturing figures

After several quarters of falling global manufacturing production, we saw signs of this bottoming out in November. The labour markets have not been noticeably affected by the manufacturing decline. The same must be said about household consumption, and this has also helped to maintain global growth. If the manufacturing figures establish a foothold, it is reasonable to believe that the economic upturn can last for longer. At the same time, we are in a late-cycle phase, especially in the USA where the central bank (Fed) has also put a lot of effort into its "insurance cut".

Complete turnaround

In 2019, the global growth rate slowed significantly, while the prices of most assets rose sharply. This was also the year when the central bank's complete turnaround resulted in both interest-rate cuts and the resumption of so-called quantitative measures. Without this complete turnaround, it could be argued that the risk of the global economy coming to a sudden halt would have been greater. At the same time, one can wonder why the Fed chose to reduce the interest rate when unemployment is record-low in the USA. And one can naturally speculate whether Trump is deliberately using the trade war to slow the economy and force an interest-rate cut in order to then sign a trade agreement and start next year's election campaign with the economy in high gear.

Trade agreement phase 1

At the beginning of December, Trump once more sowed doubt about a so-called "phase 1" trade agreement between the USA and China being close to signing. In addition, new increases in the tariffs applicable to Brazil and Argentina were announced, and there were threats of an increase in the tariffs applicable to France. From a global viewpoint, however, the trade war between the USA and China is the most important. It is still not clear whether the announced increase in the tariffs on Chinese goods on 15 December will be implemented. If, as expected, this is postponed, there is at least hope that negotiations will continue.

The road ahead …

Trump and China will continue to make things exciting in future. At the same time, we note that Brexit seems to be happening in a more controlled way than many people feared. Due to low interest rates and active central banks, shares appear to be the best alternative in 2020 too.

"Tariffs would mean prices going up, and customers don't want higher prices"
Joe Kaeser