Seasonality remains very supportive until mid-January
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Current market commentary
In the last few days, the music on the global stock markets has been playing below the surface. Europe was able to catch up somewhat with the US. The US suffered from year-end shifts – many investors have to reduce their strategic allocation of US equities, as these have performed significantly better than all other regions or asset classes this year, with the exception of gold. In return, “loser assets” such as French equities are being increased. In addition, European equities are currently benefiting from hopes of an early peace in Ukraine under Donald Trump and hopes of more reform-friendly policies in Germany after the February elections. Both the SNB and the ECB continued their cycle of interest rate cuts last week. Gold recovered accordingly from its recent mini-sell-off. Historically, the turn of the year has been a good phase for equities – stock markets are likely to remain supported until Trump's inauguration.
Short-term outlook
After the ECB's December meeting last week, investors will now focus on the Fed's meeting on 18 December and the Bank of England's meeting on 19 December until the end of the year, before the Christmas holidays are likely to make things quieter until the end of the year. On the economic front, US and German preliminary purchasing managers' indices (Dec) are due today, while US retail sales (Nov), US industrial production (Nov) and German ifo (Dec) and ZEW (Dec) indices are due tomorrow. US Housing Starts (Nov.) are due on Wednesday and US GDP (Q3) on Thursday. US consumer spending data (Nov.) will follow on Friday. The final PMIs for the US, China and the Eurozone will be released between the holidays.
Seasonality remains very supportive until mid-January
- From a seasonal perspective, the end of the year and the beginning of the new year promise a continuation of the good stock market performance. This is due, among other things, to seasonally strong fund inflows and optimism for the new year.
- Since 1928, the S&P 500 Index has returned an average of 1.3% in the sec-ond half of December, with a 75% hit rate. This makes it the second-best half of the month of the year. Prices also tend to trend positively at the beginning of January.