Monthly viewpoint

Q4 market review

02/02/2017

Highlights:

  • The fourth quarter saw government bond yields rise amid expectations for higher inflation after the US election victory for Donald Trump. Equity markets generally gained, with financial stocks performing well.
  • US equities advanced and macroeconomic data largely improved. The quarter was dominated by the presidential election and the Federal Reserve (the Fed) raised interest rates.
  • Eurozone equities made gains. Financials performed well amid higher bond yields and the European Central Bank extended its quantitative easing programme.
  • UK equities also moved higher, supported by financials while resources stocks performed well after OPEC agreed to cut oil production.
  • Japanese stocks were strong, drawing support from the currency as the yen weakened in November and December.
  • Emerging market equities underperformed, posting a negative return owing to uncertainty over US trade and foreign policy, as well as the prospect of tighter US dollar liquidity.
  • Government bond yields moved higher and yield curves steepened. Global corporate bonds generated negative total returns but outperformed government bonds.