Omnis Christmas Number One
Christmas number one in the UK charts is a hotly contested accolade. This year, our contenders to top the charts this Christmas are little different from what you might be used to...
Its beginning to look a lot like tariffs
A quick resolution to Trump’s various tariff threats (in particular with Europe and China) would be welcomed by the equity market. We have already seen since the election the impact uncertainty around trade can have can asset prices. This would remove a potential obstacle to continued solid equity market progress, especially in the US, in 2025. Resolution would also propel Europe, which could be further boosted by a clear win for a pro-reform coalition in the German federal elections due in January. However, given the structural challenges faced by Europe’s largest economy this is likely to be a marathon, not a sprint.
All I want for Christmas is... more stimulus?
Material stimulus injected into the Chinese economy by the People’s Bank of China lifted equity markets towards the end of this year. However, solid evidence of a sustainable uplift in Chinese consumer sentiment, driven in part by the government successfully drawing a line under a now much-prolonged property bust through its stimulus measures, needs to be seen before a spur in investor confidence erupts.
Fairytale of the US economy
Like a Christmas pudding, some regional economies (the USA…) seem to hold up no matter what’s thrown at them. If that strength continues, it could provide the foundation for steady performance. Ongoing economic strength in the US coupled with its robust earnings outlook and President Trump’s potential economic reforms could further boost US stocks next year.
Central banks are coming to town
On the fixed income side, continued good news about inflation could feel like unwrapping a long-awaited gift for bonds. This would underpin further the current situation in most developed markets which are offering good returns above inflation with limited risk of material capital losses. it could feel like unwrapping a long-awaited gift for markets—especially bonds.
