Paris (AFP)

At the end of a year punctuated by protectionist threats, political fears and an economic slowdown, the equity markets nevertheless ended 2019 in the firmament after having found a strong ally with central banks.

The year 2019 was "quite hectic but ultimately rather favorable for the equity markets", summarizes with AFP Gilles Moëc, chief economist of the Axa group.

And this in spite of "fairly bad" fundamentals, the result in particular of fears about international trade.

But the visibility found in mid-December, both on the trade war and on Brexit, allowed investors to slash champagne for the holidays.

Regarding Brexit, "the most important risk was the systemic risk but insofar as there is an agreement, it is not" disruptive "for the markets, which does not mean that there will not be economic consequences, "said Jeanne Asseraf-Bitton, head of Lyxor AM's investment strategy.

The overwhelming electoral victory of the conservative British Prime Minister Boris Johnson, which a priori paves the way for an orderly exit of the United Kingdom from the European Union, followed by the announcement of a preliminary trade agreement between the United States and the China involving the dismantling of certain existing taxes, have allowed the indices to reach new heights.

The Parisian flagship index, the CAC 40, like the German Dax, can boast an increase of more than 25% over the year, while the London FTSE 100 index posts a more modest increase of around 12%. .

In Asia, the Japanese Nikkei index jumped 18% and in Hong Kong, the Hang Seng composite index gained around 10%.

As for the American indices, their rise has enough to make them fade: 22% for the Dow Jones, 29% for the S&P 500 and 35% for the Nasdaq. Both the S&P 500 and the Nasdaq occasionally recorded their best performance since 2013.

We had "a year dominated first by American protectionism," said Asseraf-Bitton.

After the Sino-American trade truce of last December, we had "a very good start to the year" but the situation deteriorated "suddenly" because the United States began to "be affected" by the trade conflict, which led to a resumption of hostilities in May.

- From commercial to political uncertainty? -

But the rather sudden change in tone from the US administration at the end of the year finally reassured the markets, with Donald Trump officially announcing on December 31 that a partial trade agreement between Washington and Beijing would be signed on January 15.

This development has modified "the balance of risks", judges Mr. Moëc, and this in spite of fundamental macroeconomic data which, if they have ceased to deteriorate, do not yet show a restart.

This is also, notes the specialist, which could "limit very positive hopes" in the second part of 2020.

However, "as soon as the tensions over the trade war subsides, the markets reassure themselves that the industrial recession will remain confined and suddenly we find growth prospects", hence a recent rise in the interest rate markets , says Ms. Asseraf-Bitton.

Because the 2019 trajectory of sovereign debt has been that of a long slide, thanks to ultra-accommodating central banks on both sides of the Atlantic.

"A year ago, the working hypothesis was that the Fed would continue to raise rates with further normalization", which "was completely reversed," analyzes Mr. Moëc.

As for Europe, "in the space of a year, we have gone from an ECB which was leaving its securities purchase program only to arrive nine months later at a restart of the program", continues the specialist.

But for 2020, monetary maneuvers should be limited between an ECB engaged, under the leadership of its new president Christine Lagarde, in a vast strategic review, and an American Central Bank a priori party to leave its rates unchanged.

"Especially as the US elections approaching, the Fed may not want to appear to favor" one side rather than the other, says Ms. Asseraf-Bitton.

Because it is in the United States that political fears could resurface next year.

"I am afraid that in 2020, we will exchange the uncertainty linked to the trade war for the uncertainty linked to the outcome of the American election," concluded Mr. Moëc.

© 2019 AFP