The year that was 2017

Compared to the shocks of 2016 including the Brexit vote and the election of US President Donald Trump, 2017 has been much calmer

WITH Christmas approaching swiftly we are suddenly near the end of another year. It has been a fascinating twelve months and the markets have largely defied the frequent predictions of a sharp downward move. As things stand the FTSE 100 has made reasonable progress throughout 2017, rising by almost 5 per cent since the beginning of the year, but this compares poorly with other markets: the S&P 500, for example is up by 19.5 per cent and the European markets are showing a rise of over 11 per cent. Given the veil of uncertainty that is spread over the future for the UK this is perhaps not surprising.

As things stand now, European markets are seeing a bout of profit taking and although most attention is focussed on Brexit the EU's other issues have not gone away and there are still many challenges to face. The US market hit an intraday high last week and in many ways not much appears to have changed: we are still waiting for Trump's tax reforms to be implemented, although we are closer to this now. We have also seen a recovery in the pound against the dollar although its progress against the euro has been more modest. In the UK the FTSE 100 is once again approaching its upper limits, boosted by relative sterling weakness last week.

This time last year we had experienced a period of shocks: the unexpected Brexit vote and the election of Donald Trump as President. However, twelve months on we have become accustomed to previously unthinkable situations and we have even ended the year on a more optimistic note with relation to the progression of Brexit. At the end of 2016 there was also political uncertainty across the European Union, with a number of elections approaching and indeed it has not been all plain sailing, although so far no real disaster has occurred. We also saw a year of shocks for sterling, which took the brunt of the Brexit fallout; but fortunately 2017 has been much calmer in exchange rate terms.

Politics apart, it has been a very interesting year, with technology stocks performing particularly well: four of the top ten largest companies on a global basis are technology stocks. Inevitably comparisons have been made with the technology/media/telecom (TMT) boom in 1999, but there are differences this time although the appetite for risk is certainly at the higher end of the scale. Nowhere is this more obvious than in the current bitcoin craze. It has all the classic signs of a bubble and probably the most worrying feature is the lack of inherent value and it is pure speculation. We are also seeing this increased appetite for risk reflected in the relatively subdued price of gold (last week it hit a five month low).

As we stare 2018 in the eye it is, as always, extremely hard to make predictions. One of the most successful fund managers (Neil Woodford) has had a terrible year in terms of performance, which aptly illustrates the impossible task of getting it right all the time.

:: Cathy Dixon is a director at the Belfast office of Cunningham Coates Stockbrokers, a trading name of Smith & Williamson Investment Management ( SWIM). This article does not constitute a recommendation to buy or sell investments and the value of any shares may fall as well as rise. Investments carry risk and investors may not receive back the amount invested. The views expressed are those of the author and not necessarily of SWIM.

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