Equity market trends: volatility
The 'normal' performances at the end of 2020 disguise the strongest stock market correction and quickest recovery in several decades, and the considerable performance variations in regions, investment styles and sectors.
Following the euphoria in the equity markets due to effective vaccines in November, December experienced a modest rise in prices. The American stock markets were, again, able to post new record prices in the past month. The weaker dollar made them, in euro terms, the weakest performing region. Investors refocused on short term uncertainties in December. In particular European stock markets experienced some volatility. Due to the increasing number of corona infections and stricter containment measures in many countries, particularly the new, more infectious strain of the virus, and the deadlock for the American coronavirus relief package, investors had some doubts about their enthusiasm of the previous month. At the same time, the healthcare workers gave the first vaccinations. In Europe a sigh of relief was heard after the long-term negotiations between the EU and the UK finally resulted in a Brexit deal. The emerging markets performed well in December as well. Latin America was the outlier in December, but the region could only make up for part of the loss earlier this year. Across 2020 as a whole, the Asian markets were the definite outperformers.
In December, the value equities could not continue their outperformance in respect of growth equities. The new corona infections put the brakes on sector rotation to cyclic values.