The Motley Fool

These are 2 of the top market events for investors to watch in 2020

Investors like me have now had almost a month to get our feet under the table in the new year. During this time, one of the things I have been doing is compiling an event cheat sheet for the year ahead. I believe it is beneficial to think about some of the most important coming events that could have an impact on the financial markets.

Here are a couple of the biggest that are already on the calendar.

Sign up for FREE issues of The Motley Fool Collective. Do you want straightforward views on what’s happening with the stock market, direct to your inbox? Help yourself with our FREE email newsletter designed to help you protect and grow your portfolio. Click here to get started now — it’s FREE!

Bank of England meetings (Jan/Mar/May)

It is very hard for me to pin down any one of the three upcoming meetings as the most important, so I’ll be sure to watch out for them all. Futures markets are pricing in a 55%–72% probability of a 0.25% interest rate cut at one of these three meetings.

The probability increases the closer we get to summer. For example, the meeting on Thursday has a 55% chance of a cut, whereas the May meeting has a 72% chance.

Why is this a key market event? Well, interest rates are a key barometer of the health of an economy. The central banks of struggling economies often cut rates to boost demand. The thinking is that if people get paid very little to save money, they are more likely to spend. 

So I will be watching for if and when the Bank of England cuts, as well as the resulting move in the stock market. Traditionally, interest rate cuts are seen as positive for an index like the FTSE 100. This is because it makes debt funding cheaper, as firms are charged lower rates of interest to borrow. Further, given the international scope of the FTSE 100, a stuttering UK economy can be offset by overseas earnings.

US presidential election (Nov)

What happens across the pond with our US cousins may seem of little importance to markets here. But that is not the case. The winner of this year’s election could have a big impact on international relations.

There are numerous possible scenarios. Should Trump manage to win again, then we could see a post-Brexit trade deal between the US and UK, which could be seen as a large positive for specific beneficiaries in the FTSE 250.

Judging by past results, the market would take a Trump victory as a positive sign, which would aid risk sentiment. We saw this at the last election in 2016, when UK equities jumped along with US equities.

Also remember the adage, “when the US sneezes, the whole world catches a cold”. Should we see a surprise win followed by a period of political and economic uncertainty in the US, then the UK stock market could easily become an indirect loser as a result.

Overall, I suggest you watch out for the movements from the Bank of England in the first half of the year, and for the results of the US election in the second half. Both could set the tone for the UK stock markets in 2020.

A top income share with a juicy 6% forecast dividend yield

Income-seeking investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this out-of-favour business that’s throwing off gobs of cash!

But here’s the really exciting part…

Our analyst is predicting there’s potential for this company’s market value to soar by at least 50% over the next few years...

He even anticipates that the dividend could grow nicely too — as this much-loved household brand continues to rapidly expand its online business — and reinvent itself for the digital age.

With shares still changing hands at what he believes is an undemanding valuation, now could be the ideal time for patient, income-seeking investors to start building a long-term holding.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Income Share… free of charge!

Jonathan Smith and The Motley Fool UK have no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.