Original title: Japanese media: with the help of global interest rate cuts, global assets rose in 2019
Japanese media reported on January 5 that with the global interest rate cut as the east wind in 2019, the prices of all assets rose. The Nikkei average hit its highest level in 29 years since 1990 at the end of the year on December 30, 2019, and the total market capitalization of global stocks rose to an all-time high of $86 trillion. Bond and gold prices usually fall when share prices rise, but they also rise this time. Against the backdrop of the global economic slowdown, the excess capital market formed in the form of predicting the progress of Sino-US trade negotiations and accelerating economic growth also carries risks.
According to the Nippon Keizai Shimbun on December 31, 2019, on the last trading day of 2019, the Nikkei average fell 181.10 points from the previous weekend to 23656.62, up 18% from the end of 2018.
"this is a very obvious change."Morgan StanleyKushma, head of the bond department, looks back on world monetary policy in 2019.
Reported that on January 4, 2019, the Federal Reserve early hinted to stop monetary tightening, and then the air in the world financial markets completely changed. As a result, represented by the Federal Reserve, which cut interest rates three times in 2019, more than 50 central banks began to expand monetary easing. The recovery of the market led by monetary easing is the exact opposite of the trend in 2018, when a wide range of assets fell.
It is reported that the total market capitalization of global stocks has increased by $17 trillion in one year, the biggest increase since 2001, when there are comparable records. Share prices rose in 44 of the 46 major markets. AmericaDow JonesThe average index of 30 industrial stocks and the main indexes of Europe and Brazil hit new highs one after another.
In the bond market, national and corporate bonds rose (yields fell). The main index of low-rated bonds (high-yield bonds) with high risk and high interest rates, which made it difficult to invest because of ultra-low interest rates, rose 9%, the biggest increase in three years. The main index of the World Real Estate Investment Trust (REIT) also rose by 19%.
In addition, the report points out that there is also a side of monetary stability that promotes cross-border capital flows. The yen is expected to trade at a high of 104.10 yen against the dollar and a low of 112.40 yen, with a range of only about 8 yen, setting a new minimum range for two consecutive years. The euro and the dollar are also stable.
Reported that in the commodity market, the price of copper, which is vulnerable to the economy, began to recover. However, it is still at a level of about 10 per cent lower than in the first half of 2018. Crude oil rose 36 per cent, the largest among major assets, but was supported by production cuts, turmoil in the Middle East and weak real demand.
In fact, the current rise in share prices comes at a time when there is still no obvious recovery in the real economy. International Monetary Fund (IMF) forecasts show that the world's overall gross domestic product (GDP) will grow by only about 2 per cent in 2019. The world's purchasing managers' index (PMI) is at a level slightly above the 50 rise and fall line.
The high price of gold symbolizes the deviation between the market and the real economy, the report said. Futures prices in New York rose 20% for the year, the highest level in nine years. Gold usually has a tendency to be bought when mistrust such as stocks and currencies grows. "as an insurance against financial market movements, the situation of not giving up gold will continue," said Mr Ueno of the Nisheng basic Research Institute.
The report also points out that, on the other hand, the side effects of monetary easing are strengthening. According to the Institute of International Finance, the world debt balance is expected to increase by 5% over the previous year by the end of 2019, reaching an all-time high of 255 trillion US dollars.UBS"the knock-on effect of low growth is likely to continue as money flows to zombie companies that should have been eliminated," says Mr Aoki of wealth management.
It is reported that the relevant departments are paying more attention to the side effects. In December 2019, the United States proposed to stop cutting interest rates, while in Europe, the Swedish central bank decided to stop the policy of negative interest rates on the grounds of inflated household debt. The market brought about by monetary easing is likely to reach an inflection point by 2020.