Since the summer of 2019, the global stock market has trended back and forth between optimism and pessimism concerning the global economy. October has proved a more optimistic month. Signs that U.S.-China trade tensions may not escalate further, or even reach an agreement have helped markets. Plus, continuing policy response by central bankers around the world has boosted market confidence. The market’s assessment of Brexit outcomes too has perhaps become a little more positive in recent weeks as the British pound has strengthened from recent lows.
That said, concerns do remain. Growth is soft in many areas of the world, notably in Europe, and China’s apparent slowdown is a concern. Therefore, downside risks do remain for the global economy.
Overall, we are now just over eight weeks away from the end of 2019. The year so far has been a healthy one for equity markets. In part because the turn of the year coincided with a period of extreme pessimism that wasn’t sustained. Although markets have lacked real direction in recent months the gains for many major stock markets in the first half of 2019 were substantial, the second half of the year may result in more subdued equity market returns.