Economic Views

Quarterly markets review - Q4 2016

An overview of markets in Q4 2016 when the US presidential election dominated the news and bond yields generally rose.

01/09/2017

Investment Communications Team

Investment Communications Team

  • 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 (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.

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The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes only and it is not intended as promotional material in any respect.