Market Reviews / Published on .

How are the markets looking in 2020?

What's in store for us in 2020?

It’s a question we’d all like to have the answer to. Even though we can exercise some control over what happens in our daily lives, nothing is more uncertain than trying to predict events such as economic developments.

But some forecasters risk it by sharing their analyses.

Here’s a summary of the economic predictions for 2020. Without any pretense, let’s get out our crystal ball!
Cautious optimism 

Some of the risks that loomed in 2019 are no longer as worrisome, and forecasters are generally rather optimistic about the economy. Here is what they think:

  • The global economy will resume growing or, at the very least, will stabilize;
  • Central banks will remain accommodative and will tolerate a rate of inflation above their target to ensure sustained economic growth;
  • In the trade war between the United States and China, the status quo will prevail. 
On the markets

The consensus calls for positive returns for stocks and neutral results for bonds.

In terms of equities, the markets outside the United States have significant and promising growth potential for many reasons.


As for bonds, inflation-linked and corporate securities look more attractive than government securities issued by the developed countries, where interest rates are low.

Canada

At home, the context looked positive at year-end:

  • Easing trade tensions should allow the current economic momentum to continue; 
  • The  pause in the dispute could encourage an economic transition to exports and business investment;
  • To ensure that the Canadian dollar does not go up too much, the Bank of Canada could lower its key interest rate.
What to watch for

A number of factors could influence the economic context and should be monitored in 2020. Among them:

Responsible investment
The effects of climate change are very real. Moreover, a number of central bankers have clearly identified climate change as a risk to global financial stability.

United States
It seems that the United States, and its president, will again be the centre of the universe this year. We must keep an eye on the presidential election, whose outcome could disrupt the markets. 

Inflation
Renewed economic growth in a context of full employment could generate inflation and cause investors to react accordingly. 

The unknown!
It’s always the most worrisome factor. The Wuhan virus is an example of an unforeseeable event that could muddy the waters. 

This cautiously optimistic view of 2020 is also a risk we should take into account. Bad news always has a greater impact when the mood is festive.

Don’t be swayed 

Whatever the forecast, by opting for preauthorized contributions (PACs), you can limit the market’s impact on your investments.

In highly volatile markets, PACs help reduce your portfolio’s exposure to market fluctuations.

PACs also take emotion out of the equation: no matter what happens on the stock market, you invest the same amount and you stay invested.

Finally, a useful reminder at this time of year: PACs prevent us from being at the mercy of the markets in February and having to come up with a large sum to meet the deadline for contributing to a Registered Retirement Savings Plan (RRSP).

Do you want to set up a periodic savings plan to contribute to an RRSP or a TFSA (Tax-Free Savings Account)?

If so, contact one of the mutual fund advisors and representatives at FÉRIQUE Investment Services, the principal distributor of the FÉRIQUE Funds.

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The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that would have reduced returns.

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