With such a deluge of market-moving events taking place throughout the year, it's tough to summarise them all in a short newsletter. With that being said, here is a recap of a few of the key stories that affected the markets in 2017.
Donald Trump assumed office amidst a sea of protests in a divided America. As the first person to win the presidency without public sector experience, he has taken a radically different approach from former leaders.
Facing scorn from the left and praise from the right, the President is attempting to make good on his words during the campaign and has attempted to enact his legislative agenda, which was centred on addressing unfair trade practices, illegal immigration, job-killing regulations, the failures of Obamacare and much more.
The attempt to repeal and replace Obamacare was his first major legislative failure as President. Despite controlling the House and the Senate, Republican lawmakers could not get a repeal bill through, after 48 Democrats and 2 Republicans including John McCain voted no. In the months after the defeat, Trump pushed ahead with plans for the largest tax cut in a generation for America, and in December, the GOP managed to pass his tax reform bill.
Despite so much controversy over his policies (including recognising Jerusalem as the capital of Israel, enacting a travel ban for several majority muslim nations, attempting to ban transgender service members in the military, pulling the US out of the Paris climate accord and so much more), investors reacted to Trumps Presidency by pouring money into the markets.
The S&P500 index has added over $2 trillion in market value since the inauguration in January. The tech sector, one of the biggest gainers, added over 30% since the election.
Critics are quick to point out however that the stock market was on an upward trajectory before Trump under Obama, though this bull-run in stocks may indeed have something to do with cuts to corporate tax rates, deregulation and an 'America first' approach to trade policy from the Trump cabinet.
The euro zone’s annual economic growth rate outstripped that of the United States in Q3 2017, setting it up as the best year for the currency area since financial markets crashed 10 years ago ago.
A strong labour market recovery, growing export markets, an accommodative monetary stance from the ECB, improving lending conditions and modest inflation are but a few of the factors that have made the Eurozone flourish throughout the year.
While geopolitical risks in the form of Brexit, Catalan independence, growing far-right movements and German political instability temporarily hit the Euro throughout the year, the economic outlook is currently much brighter.
In January 2017, Xi Jinping became the first Chinese leader to stand upon the stage at the World Economic Forum in Davos, Switzerland and give an address. The speech was designed to portray China as an open economy which was ready to take Americas place as the worlds key bastion of free-trade, and reiterated the tectonic shift in power from West to East.
In October, Jinping cemented his status as China’s most powerful ruler since Mao Zedong, by having his name written into the communist party constitution.
China's economic growth moved higher throughout the year, but analysts expect a slowdown in 2018, as the government in Beijing and overly leveraged companies begin to taper back on their reliance on debt to fund projects. China's debt-to-GDP ratio increased to over 250% in 2017, but UBS say fears about this are overblown.
The crypto craze
Bitcoin began the year at around the $1200 mark and moved above $20,000 at its peak - momentum which was unmatched by any other asset throughout 2017.
The end of the year saw a big dip in the price of Bitcoin, which our CEO Kerim Derhalli spoke about in several major publications. He also has a prediction for the coin in 2018!
Brexit
Details for how the Conservative government intended to carry out the Brexit process were still thin on the ground as 2017 began.
Theresa May gave a speech at Lancaster House in mid-January warning that a bad deal for Britain would be a bad deal for Europe, and that Britain would not remain a member of the customs union after leaving the bloc in 2019, a statement which was met with uproar by pro-Remain members of Parliament.
The Prime Minister's key Florence speech in September outlined her commitment to a stable and close partnership with the EU post-Brexit, but businesses across Britain still faced uncertainty in terms of future trading arrangements. Despite her insistence that Britain should receive a special and tailored trading arrangement, the EU's Chief Negotiator clearly felt differently.
Thankfully, after conceding to pay the EU a considerable sum (over £35 billion) and resolving the issue of a hard border in Northern Ireland, later in the year the EU deemed that 'sufficient progress' had been made, and thus talks moved forward to their next stage - trade.
Amidst the countless worrying headlines concerning Brexit talks throughout the year, the Pound held its own against major currencies, moving up considerably against the Dollar whilst struggling against the Euro, which was stronger off the back of consistently upbeat economic data flowing out of the Eurozone.
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