Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
The global stock markets demonstrated impressive results in 2019. Analysts, however, think that a pullback is possible.
The general consensus this year, even by people who aren’t exactly deep into financial metrics, is that 2019 has been mostly good. On average, global stock markets have performed impressively and still push on. For specifics, Deutsche Bank’s Chief Economist Torsten Slok has highlighted the global stock markets’ 2019 pump to be over $17 trillion.
For several reasons including more attention by government and financial authorities, the progress has been quite noticeable. According to Slok, global stock markets were below $70 trillion in January. As of now, this figure has surged past $85 trillion.
Despite the problems that stemmed from the long-running trade tensions between the U.S. and China, things are still looking good. The Federal Reserve dropped its interest rate multiple times in 2019 with the European Central Bank (ECB) also following suit.
Also, and for many months, the trade war put a dent in the stock markets with repeated tariffs from both countries. However, the two countries are no longer willing to continue the war and have reached a phase one of a trade deal.
Both Facebook and Apple, two of the biggest stocks in the U.S. market, have also pulled interesting gains for their investors. Facebook (FB) has surged 57% in 2019 alone while Apple (AAPL) has year-to-date (YTD) gains of 80% with its market cap crossing $1 trillion. The larger markets including the Dow Jones Industrial Average (DIJA) as well as the S&P 500 have both gained over 20% in 2019. S&P has done more than 28%.
What’s for 2020?
This trajectory might change as 2020 begins in a few days. While all of the factors that pushed stocks higher still remain, investors might be looking to dispose of some of their holdings. This decision, according to Leuthold Group Chief Investment Strategist James Paulsen, might be directly tied to tax reasons. He said:
“I think people won’t want to add any more taxable gains this year, so they’ll probably defer to next year. They made a lot of money. A lot of them will tend to look at rebalancing.”
While stocks have been great, some pullback might happen – probably for that exact reason. Paulsen expects pullbacks at some point in early 2020 as a form of correction.
“I suspect we’re going to cool the jets of bullishness in the first quarter…It wouldn’t surprise me if we had a pullback.”
Market pundits, however, believe that the pullbacks, if they do happen, might not be strong enough to do any considerable damage.
Continuing the bullishness, the S&P 500 has pulled in more than 8% in Q4 2019. If the index can pull in 10% more than the 28.6% it already boasts off, it will have hit levels not seen since 1997.
As expected, the first few days of January 2020 might set the course for the whole year. Interestingly, some people believe that some of the non-performing stocks of 2019 might jump in January. According to T3 Live Chief Strategic Officer Scott Redler, Uber and Beyond Meat might fit this explanation.
“These could have the January type of effect…where selling pressure will lift and people who took losses in December, after 30 days, they can buy them back”, said he.