Slowing economies in Germany and Japan, trade disputes with the U.S., and shifts in France and the U.K. were all concerns reflected in reduced prices.
The same shift, with value outperforming growth, was also part of international returns. Small company stocks also had larger losses than large companies. All of this said, there were some significant positives for these stocks:
- The U.S. dollar finally showed some weakness against international currencies. This could be because our economy is not growing as robustly as it was, the Federal Reserve backing down slightly from future rate increases, or for many other reasons.
- The International Monetary Fund’s (IMF) economists are still predicting growth of 3.7% for the global economy in 2019. Not quite as high as it was, but still a healthy number.
- Cheap oil also benefits most international economies as it does for the U.S.
- Inflation remains at bay in most economies, so the risk of central banks suddenly increasing interest rates is relatively low.
- Canada, Germany, Italy, and some Asian countries are working on fiscal stimulus packages similar to the tax cuts the U.S. implemented in 2017.
- Just as unemployment is low in the U.S., it is relatively low around most of the globe. The IMF reports that worldwide unemployment for advanced economies was at 5.2% in October (the latest data available), compared to 5.6% in 2017.
Summing up, international developed economies showed some slowing in Q4 which, as in the U.S., had to come eventually. However, a weakening dollar, cheap oil, growing employment, and fiscal stimulus should eventually lead to higher stock prices.