2017 in the history books

December can be summarised as yet another positive month. Now that 2017 is history, it is also clear that the year as a whole was one of the strongest ever on the stock exchange.

During the month, the US S&P 500 Index rose by 1.1 per cent measured in USD, while the European Stoxx 600 Index increased by 0.75 per cent measured in EUR and the Nordic VINX Index fell by 0.1 per cent measured in NOK. For the year as a whole, these indices rose by 22, 11 and 19 per cent respectively. The figures are also strong in a historical perspective – especially for American shares, which have produced an average annual return of 10 per cent since the S&P 500 Index was established almost 90 years ago.

Good backdrop

From a macro viewpoint, 2017 was also sound year, with a harmonised upturn in the activity figures of both industrialised countries and emerging economies. At the same time, a lot of the political unrest peaked with the French election in May, following concerns about increased populism driven by Brexit and Trump. Fears of a trade war with Trump also so far seem to have been exaggerated. In addition, global inflation was surprisingly low, despite the rising oil price. At the start of 2018, the macro impetus still appears good. Geopolitically, however, nerves are strained due to the ongoing conflict between North Korea and the USA. This situation may affect the stock markets to some extent during 2018.

Back to "normal"

The central banks' extensive stimulation of the economies has received a lot of attention in the wake of the financial crisis. Now, the journey back to "normal" has started, although it is gradual and cautious. So far, this has been welcomed by the financial markets. The US central bank will continue to increase the interest rate and reduce the balance sheet in 2018. The acid test will probably not take place until closer to the summer, when the European Central Bank announces its plans for quantitative-easing measures after September.

The road ahead ...

The global economy is doing well. For the first time in ages, we are experiencing coordinated growth in that the USA, Europe and markets in Asia and South America are experiencing good and in part increasing growth. At the same time, low interest rates and stimulating central banks have contributed to a rise in share prices. Now that we have also started on the journey back to "normal", we must probably expect greater fluctuations on the stock market in 2018. However, we are not concerned as long as the underlying economies continue to be strong.

"The key to making money is to stay invested"
Suze Orman