Market Wrap – January

Positive end to 2017

• Most share markets ended 2017 positively, with global shares in hedged terms returning 1.1% in December, topping off a strong year (20.0%).
• A strong earnings season and the passing of the long anticipated tax reform legislation boosted US shares in December. The S&P 500 delivered positive returns for each month of 2017 without much volatility.
• It was also a good year for European markets, though the German and French share markets took a breather in December after political uncertainty and some easing in earnings expectations upstaged positive momentum.
• Emerging market shares were the star performers in 2017 as a weak US dollar coupled with strong global growth boosted earnings.
• Key central banks were encouraged by the health of economic growth. The European Central Bank announced it would start to reduce its monthly quantitative easing purchases from January while the US Federal Reserve raised rates again in December, in line with market expectations and has announced a gradual reduction in the size of its balance sheet.
• Oil prices continued to rebound in December, crossing the US$60 a barrel mark and ended the month at the highest level since 2014.
• Locally, Australian underemployment fell again in Q4 and at 8.3% is now well down from the Q1 2017 peak of 8.9%.

 Major asset class performance (%)

Currency

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