“The darkest hour is just before the dawn”
Attributed to Thomas Fuller back in 1650 – an English theologian and historian. While this is well understood metaphorically, there’s a lot of (largely pointless) argument around whether it is literally true that the darkest hour is in fact just before dawn.
For investors December 2018 was a time of darkness and market turmoil. However January’s dawn saw a sudden and unexpectedly strong turnaround.
In NZD terms, the leading US index (S&P500) was hit with a 6.9% fall in December, only to bounce 4.8% in January – consistent with the bounce in markets globally – such as Germany +2.6% , Japan +2.0% and NZ +2.3% . In local currency terms, MSCI’s global equity index had it’s best January since 1987!
Why a rebound?The rebound in equities cannot be explained by one single factor – although strong US job numbers (now 100 consecutive months of job creation),the end of the US government shutdown and more agreeable equity valuations all helped.