Stock markets end year on new high
Markets are ending 2017 in a party mood after a pick-up in global growth boosted corporate profits and commodities, while tame inflation kept central banks from snatching away the punch bowl of easy monetary policy.
MSCI’s world equity index, which tracks 47 countries, inched up 0.13%, and was poised to add a 14th straight month of gains to put it at an all-time high.
The index gained 22% for the year, implying that many pensions have had a good year. Emerging markets have led the charge with gains of 34%. Hong Kong surged 36%, South Korea climbed 22%, India rose 28%, and Poland made 27% in local currency terms.
Japan’s Nikkei and the S&P 500 in the US are both ahead by almost 20%, while the Dow has risen by a quarter. In Europe, the UK’s FTSE has lagged behind a little with a rise of nearly 8%. Dublin’s Iseq Overall index notched up a gain of 7.3% in the year. Craig James, chief economist at fund manager CommSec, said of the 73 bourses it tracks globally, all but nine have recorded gains in local currency terms this year. “For the outlook, the key issue is whether the low growth rates of prices and wages will continue, thus prompting central banks to remain on the monetary policy sidelines,” said Mr James.
One of the early issues for next year will be an Italian election scheduled for March 4. As things currently stand, the vote is expected to produce a hung parliament that could ultimately catapult the 81-year-old, four-times premier Silvio Berlusconi back to centre stage. Benchmark 10-year Italian government bond yields rose to fresh two-month highs yesterday at 1.99%. They started the year at just over 1.8% but are still under the highs of 2.6% hit back in March.
Measured against its major peers, the dollar has shed nearly 10% this year, putting it on track for its biggest annual loss since 2003.
Among the winners have been emerging markets and the euro, which is ahead almost 14% for the year and has turned in its best annual performance since 2003.
Oil prices were near their highest in two-and-a-half years after data showed strong demand for crude imports in China and a surprise fall in US production.
