Brexit and US presidential election set to ensure lively 2020 for stocks

UK stocks enter 2020 with many of the market-moving themes of the past year still very much at the forefront as Brexit and the US-China trade war remain as yet unresolved.

With the next deadline for EU withdrawal on January 31 and the US presidential election scheduled for November 3, 2020 is set to be an eventful year from start to finish.

The global economic picture is also likely to be key to the health of stock markets worldwide and any further central bank action to boost growth – either on these shores or across the Atlantic – will offer potential support for equities.

Here we ask market commentators for their outlook on the year ahead and where they predict the FTSE 100 Index will end 2020:

– Russ Mould, investment director at AJ Bell

“It is relatively easy for value-seeking contrarians to make a case for the UK stock market because it has underperformed relative to global peers in 2019, feels unloved judging by fund flow data and looks potentially undervalued on the basis of earnings and yield.

“As such, we believe the FTSE 100 has a fighting chance of making it to 8,000 by the end of 2020.

“Granted, the issue of Brexit must still be resolved and doubts continue to hover over the health of the global economy.

“However, were the UK to strike a trade deal with the EU, Washington and Beijing to settle their differences once and for all and governments around the world abandon austerity and launch looser fiscal policies then the outlook for next year could look very different.”

FTSE prediction: 8,000

– Helal Miah, investment research analyst at The Share Centre

“By the end of January 2020, we will be past another stage of this Brexit saga given Boris Johnson’s emphatic general election win and majority in Parliament.

“With belief that a no-deal scenario will be avoided, businesses and consumers can be more confident in investing and spending.

“The economy could pick up pace, but we don’t expect this to be by much at all – looser fiscal spending will take its time to circulate and boost economic activity, meanwhile a sluggish global economy will probably have more of a direct impact on UK activity level during 2020.

“Towards the end of 2020, Brexit concerns will build up again as we don’t expect a deal to be arranged beyond the transition period, which means we could see a wobble in the markets.

“However, other than this, investors will take a more upbeat stance and realise UK shares trade at low valuations.

“Investors will flock back to sectors that have performed poorly in 2019, some of which traditionally pay a good yield, such as utilities, banks and insurers.

“Meanwhile any gains in sterling will result in the multinationals holding back.”

FTSE prediction: 8,100

– Emma Wall, head of investment analysis at Hargreaves Lansdown

“Within the UK blue chip index, I expect there will be a lot of movement under the hood, with certain sectors – particularly those linked, once again, to political outcomes – doing well.

“As soon as the general election vote was declared, we saw those sectors sensitive to domestic growth bounce.

“The UK retail banks – Lloyds, Barclays and Royal Bank of Scotland – benefited, as did property stocks, both housebuilders and real estate investment trusts. Retail stocks also rose in the days following.

“This theme is likely to continue to play out through the year, provided the Brexit delivery date promised by re-elected Prime Minister Boris Johnson is not pushed back yet again.

“And there is one almighty caveat – UK stocks only crank upwards if the US stock market does too.

“If the stock market crash currently being predicted by bond prices comes to fruition, global markets are all going down.

“Donald Trump will probably inflate things for another year in order to secure re-election, but 2021 looks a lot less rosy.”

FTSE prediction: 7,884

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