The year began with continued optimism following Trump’s election, with stocks rallying in the first quarter despite the Fed raising rates and signalling further increases to come. The S&P closed up close to 5% for the first quarter while in Europe markets followed suit despite a different political backdrop as the UK triggered Article 50, and in France, the far right candidate Marine Le Pen was polling well.
We saw substantial movements in bond markets driven by a changing central bank dynamic turning noticeably more hawkish. Equity markets moved higher as earnings and macro news continued to improve. European unemployment levels were at their lowest since 2009. Politics continued to dominate headlines, Leo Varadkar becoming Ireland’s youngest Taoiseach, Macron defeating Le Pen in France while in the UK Theresa May failed to gain a majority in Parliament, following a snap election.
As the year comes to a close we have seen the Bank of England raise their interest rate for the first time in a decade and Jerome Powell replace Janet Yellen as Head of the US Federal Reserve. Bitcoin has been the hot topic as the cryptocurrency traded through $15,000 up from $1,000 at the beginning of the year. With Ireland’s 2017 tax revenues ahead of target, the question remains as to how Trump’s tax bill will impact on Ireland in the longer term. Looking ahead into 2018 we remain cautiously optimistic on equity markets supported by an improving earnings and macro environment.
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