December 2017

• Global markets ended 2017 strongly as synchronised economic growth, rising corporate earnings and accommodative financial conditions supported equities.
• U.S. tax reform legislation boosted investor optimism heading into 2018.
• European and Japanese markets benefited from strong export demand and improving business confidence.
• Emerging markets significantly outperformed over the year due to stable growth and strong capital inflows.
• Commodity prices remained firm, particularly oil and industrial metals.
• Volatility remained exceptionally low across global financial markets.

Asia (ex. Japan)

Asian markets outside Japan ended the year strongly as technology demand, export growth and stable Chinese economic conditions supported investor confidence. Chinese authorities continued balancing deleveraging efforts with growth stability.

South Korea and Taiwan remained among the strongest-performing markets globally due to semiconductor demand, while India benefited from improving economic momentum and structural reforms.

Europe

European equities advanced modestly in December as economic data remained strong and investor confidence stayed elevated. Manufacturing activity and employment conditions continued improving across the eurozone.

The European Central Bank maintained highly accommodative monetary policy despite gradually improving inflation and growth conditions. The euro remained relatively strong against major currencies.

United States

U.S. equities reached further record highs in December after Congress passed major corporate tax reform legislation. Investors anticipated stronger earnings growth and increased business investment in 2018.

The Federal Reserve raised interest rates again while maintaining a gradual tightening outlook. Economic conditions remained highly supportive, with strong employment growth and healthy consumer spending.

United Kingdom

UK equities ended the year with modest gains despite ongoing Brexit uncertainty. Sterling remained volatile throughout the month as negotiations with the European Union continued progressing slowly.

Inflation remained above target, though consumer spending conditions softened slightly. The Bank of England maintained expectations for only gradual future tightening.

Japan

Japanese equities finished 2017 strongly as exporters benefited from improving global demand and stable currency conditions. Corporate earnings growth remained robust across industrial and technology sectors.

The Bank of Japan maintained its accommodative monetary framework and continued supporting favourable financial conditions for businesses and consumers.

Emerging Markets

Emerging markets closed the year strongly as improving global growth, strong trade conditions and continued investor inflows supported performance. Asian markets led gains throughout much of the year.

Commodity exporters also benefited from recovering oil and industrial metals prices, helping improve fiscal and economic conditions across several economies.

Commodities

Commodity prices ended 2017 on a firm note. Oil prices remained elevated due to OPEC production discipline and improving demand conditions globally.

Industrial metals continued benefiting from strong manufacturing demand and Chinese infrastructure spending, while gold prices remained relatively stable despite rising global equity markets and higher U.S. interest rates.