A good year for global share markets – but are we to expect a volatile 2018?

The world’s share markets were a profitable place to be in 2017, but the year was not without its drama.

We saw the unrelenting reality show of Donald Trump and his tweets and over on this side of the Atlantic the ongoing saga was Brexit and the “strong and stable” government which was promised but never materialised. North Korean rockets were a regular headline feature, as was the growing assertiveness of China under Xi Jinping. Europe had a crop of elections to worry about with 2017 finishing with Germany without a government since September and Spain and Catalonia seemingly back at square one.

….and yet world stock markets had a very good year.

In sterling terms, the MSCI World Index was up by 20.11% and this was not, as might be expected, solely the impact of the strong performance of the USA which accounts for just over half of the World Index. When you strip out Uncle Sam’s influence, the rest of the world still returned 21.03%.

The reasons behind markets being so buoyant will keep the economists and investment commentators in deliberation for some while. Absolutely key, however, were continued low interest rates (despite US and UK rises) and more quantitative easing (QE) from the Eurozone and Japan which certainly helped these regions in 2017 and is likely to continue into 2018. The global economy also began to display synchronised rising growth, with the obvious exception of the ‘Brexit-braked’ UK.

At first sight, the outlook for 2018 looks very similar. We are still seeing the ongoing soap opera saga of the US administration; there is another European election to worry about – in Italy this time – and Angela Merkel will have another go at creating a coalition government. We expect interest rates in the both the US and possibly the UK will rise, while the ECB in Europe is set to cut back and possibly end its QE.

Many market pundits are predicting that investment markets will be more volatile in 2018 – but that’s hardly a major insight given their near serene progress in 2017.

You may well have benefited from last year’s solid returns – certainly our in-house portfolios produced returns of between +8.28% and +18.52% in the calendar year and, even taking ongoing adviser fees and platform fees into account, all produced returns at least 13 times the average 90day notice deposit account.” Source FE Analytics 8/1/2018.

Please, however, do not assume you can leave your investments unchanged for 2018. Now is the time to get in touch with us about any rebalancing or review that may be necessary for the year ahead.

Please Note: The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.