Market Review December

UK

The FTSE All-Share Index gained 3.3% in sterling terms during December. The UK appeared on course to leave the EU in January after the Conservative party won the December general election by a sizeable margin and parliament voted in favour of ratifying the withdrawal agreement with the EU. UK economic data was generally lacklustre, with surveys suggesting that both the manufacturing and service sectors had contracted in November. UK retail sales also fell for a fourth consecutive month in November. UK inflation remained well below the Bank of England’s target, at just 1.5% in November, while official data showed house price growth had dipped to a seven-year low in October. In terms of sectors, technology hardware & equipment (16%) and electricity (10.6%) led, while mobile telecommunications (-3.8%) and personal good (-3.3%) underperformed.

FTSE All-Share Total Return (TR) GBP (%)*

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Europe

The FTSE World Europe ex-UK Index rose 1.1% in sterling terms. European stocks, along with global equities in general, found support from progress in US-China trade talks. Eurozone economic data released during December was mixed, with figures showing German industrial output had fallen sharply in October year on year, while capital goods saw the brunt of the decline. Survey data also showed the eurozone manufacturing sector had contracted in December, depressed by weaker activity in Germany, though the eurozone service sector activity gauge remained inside expansion territory. The Sentix eurozone investor sentiment index turned positive in December following several months of negative readings. There was additionally an overall improvement in German business confidence, with the Ifo gauge rising to its highest level in six months in December. 

FTSE World Europe ex UK TR GBP (%)*

US

The FTSE All-World North America Index advanced 0.6% in sterling terms over December. US stocks made good gains over the month, buoyed by trade hopes and positive economic data. The US and China are to sign a “phase one” trade deal in January, while the US also agreed to drop some of the tariffs it imposed on Chinese goods during 2019 and cancel a further tariff rise that was scheduled for December. China agreed to desist from competitive currency devaluations, off improved access for US financial services, provide better protection for US financial services, provide better protection for US intellectual property and annually import substantial amounts of US agricultural goods. US labour market and manufacturing data surpassed expectations for November. President Trump was impeached for abusing his office but is expected to be acquitted by the senate in early 2020.

FTSE All-World North America TR GBP (%)*

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*Source: Lipper to 31 December 2019, total return. Indices rebased to zero at 29 November 2019.

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