Credit Suisse forecasts 'modest' single-digit gains for stocks in 2020

Strategists at Credit Suisse forecast "modest" single-digit returns for equity investors in 2020, despite a wide assortment of risks which were expected to buffet financial markets, even if the US-China trade war eased and Brexit related uncertainty decreased.

Thus, the Swiss investment bank predicted that global gross domestic product would expand at a "moderate" pace of 2.5% over the following year, telling clients that a recession was "unlikely".

Credit Suisse said stocks still offered an "attractive return advantage over low-yielding bonds", with IT its preferred sector, although Financials were also deemed "attractive".

Returns for many of the highest quality bonds on the other hand were expected to "very likely be negative" in 2020 "and beyond", although other debt categories including that of intermediate quality and hard currency emerging market debt were expected to fare better.

In commodities, gold prices were seen "consolidating" while crude oil prices might endure a period of weakness before an eventual recovery.

Among the potential headwinds for investors, Credit Suisse named the "polarised" US presidential campaign, pressures on company margins, elevated levels of corporate debt and fewer interest rate cuts by central banks around the world.

Investors' nerves might also be tested by "unexpected political developments" in 2020, they said.

On a more positive note, liquidity conditions were expected to remain accomodative and geopolitical tensions to ease, so that business sentiment should improve as the US-China trade war subsided, driving gains in growth-oriented sectors and stocks.

Economic growth in the US was seen slowing to 1.8% - alongside rising core inflation - and the US dollar to weaken over the course of the year, although it would remain "supported".

Euro area GDP was pegged to expand at a clip of 1.0% amid "fiscal stimulus and diminishing Brexit uncertainty [that] should support the EUR."

Swiss GDP growth meanwhile was seen at 1.4%, China's at 5.9% and Japan's at 0.4%.