A five-year view, which shows the dominance of the US stock market since the start of the decade.

	31/12/2019	31/12/2024	Five-year change
FTSE 100	7542.44	8173.02	8.36%
FTSE 250	21883.42	20622.61	-5.76%
FTSE 350 Higher Yield	3653.2	3799.73	4.01%
FTSE 350 Lower Yield	4512.45	4784.06	6.02%
FTSE All-Share	4196.47	4467.80	6.47%
S&P 500	3230.78	5881.63	82.05%
Euro Stoxx 50 (€)	3745.15	4895.98	30.73%
Nikkei 225	23656.52	39894.54	68.64%
Shanghai Composite	3050.12	3351.76	9.89%
MSCI Em Markets (£)	1574.291	1606.697	2.06%
UK Bank base rate	0.75%	4.75%
US Fed funds rate	1.5%-1.75%	4.25%-4.50%
ECB deposit rate	-0.50%	3.00%
Two-yr UK Gilt yield	0.65%	4.37%
Ten-yr UK Gilt yield	0.76%	4.57%
Two-yr US T-bond yield	1.59%	4.24%
Ten-yr US T-bond yield	1.92%	4.57%
Two-yr German Bund Yield	-0.64%	2.08%
Ten-yr German Bund Yield	-0.19%	2.36%
£/$	1.3247	1.2524	-5.46%
£/€	1.1802	1.2095	2.48%
£/¥	143.9671	196.8264	36.72%
Brent Crude ($)	66.02	74.65	13.07%
Gold ($)	1519.5	2609.1	71.71%
Iron Ore ($)	92	100.73	9.49%
Copper ($)	6156	8811.5	43.14%

We recently issued a Bulletin headlined with the perhaps surprising fact that the FTSE 100 had just achieved its fourth successive calendar year of growth. That set us pondering what global investment performance would look like from the viewpoint of the start of the decade, which we will take – perhaps controversially – to be where the markets started 2020. The table above provides one answer, while the graph below offers a more limited but quicker to grasp view:

The table and graph highlight several factors:

• Interest rates, whether dictated by the central banks or measured by Government bonds, have increased significantly across the half decade. The start of the period was very much the closing era of ZIRP (zero interest rate policy). The 0%ish world survived until 2022, at which point Covid related inflation prompted central banks into action.
• The US stock market (orange line) is the standout performer. A significant slice of this is down to the Magnificent Seven, as discussed in our earlier Bulletin. Even so, the equal weighted S&P 500 was up 51.4% over the period.
• The second place (grey line), for Japan’s Nikkei 225 hides the miserable performance of the Yen in the 2020s. Against the mighty US Dollar the Yen fell by almost 31% from the start of 2020, meaning that, in US Dollar terms, the Nikkei 225 rose just 16.6% across the five years.
• Sterling and the Euro both also fell against the US Dollar, by 5.5% and 7.7% respectively. In US Dollar terms, that meant the Footsie was up 2.4% over the five years although, as we remarked in our earlier Bulletin, higher UK dividend yields would narrow the total return gap to a small degree.
• The MSCI ACWI, a global equity index, rose by 57.5% over the five years in Sterling terms (48.9% in US Dollar terms). Unsurprisingly, a good slice of that was due to US equities.
• Gold was a strong performer, mostly in the second half of the period. However, it was overshadowed by the price of its supposed digital counterpart, Bitcoin, which rose by just over 1,200%.

Comment

The first half of the 2020s has belonged to the US stock market and US currency. Can that momentum can continue for the next five years or does reversion to mean bite at some stage?

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