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Article | 09 January 2020 |
In perfect harmony
Following a spate of interest rate cuts, the US Federal Reserve (Fed) ended the year in wait and see mode. The Fed will keep a close eye on inflation, but its tone is seen as ‘doveish’. This means financial markets still expect the next move to be a cut. The Bank of Japan joined the Bank of England with a similarly doveish stance. While Christine Lagarde, the new president of the European Central Bank, suggested she was neither hawk nor dove, more an owl ‘with a bit of wisdom’.
Very, very big oil
Shares in Saudi Aramco made an impressive market debut. The huge oil company had a bumpy road to market, and only a tiny proportion was listed on the local stock market. But demand was strong, which pushed the market valuation above $2 trillion. That’s almost double the size of Apple, the next biggest company in the world. Saudi promises of yet more production cuts, tightening the lid on supply, have kept the oil price rising. This could potentially boost the company’s profits, always good news for shareholders.
And the winner is...
Netflix! The content streaming giant is the best performing stock in the S&P 500 over the past decade, rising a staggering 3,767%. Despite dominating the markets over recent years, the only other member of the FAANGs (Facebook, Apple, Amazon, Netflix and Google) to make it into the Top Ten was Amazon (+1,209%). Netflix has shown the benefits of being first mover in a fast growing market. But Disney and Apple are keen to take a slice of that pie. And the winner for the 2020s… is just impossible to predict.
Data correct at 05.12.2019
Architas’ Chief Investment Officer Jaime Arguello outlines the risks and opportunities for financial markets in the coming year.