Following a stellar 2019, with the S&P 500 delivering its secondbest annual return of this bull market cycle, equity markets have received a geopolitical wake-up call to begin 2020. The U.S. drone strike that targeted and killed Iran’s top general, and Iran’s retaliatory ballistic missile strikes on U.S. military bases in Iraq, put equity markets on edge at times—that is, until details about Iran’s strikes emerged and both sides attempted to de-escalate. Overall, financial markets have not reacted much to the U.S.- Iran conflict despite the serious nature of the developments and meaningful risks that linger. Are they too complacent?

Market pulse

• 3 Trade standoff has reduced the U.S. trade deficit
• 3 The contours of the Canadian banking landscape
• 4 A spot of good news for Europe’s economy
• 4 Hong Kong stocks begin the year on an upbeat note

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