LONDON: Markets were ending 2017 in a party mood on Friday after a year in which a concerted pick-up in global growth boosted corporate profits and commodity prices, while benign inflation kept central banks from snatching away the monetary punch bowl.
MSCI’s world equity index, which tracks 47 countries, .MIWD00000PUS inched up 0.15 percent as six straight weeks and now 13 straight months of gains left it at yet another all time high.
The index has been on an upward trajectory for pretty much all of 2017, putting it 22 percent and almost $9 trillion higher for the year.
Emerging markets have led the charge with gains of 34 percent .MSCIEF. Hong Kong .HSIsurged 36 percent, South Korea .KS11 notched up 22 percent and India .BSESN and Poland .WIG20 both made 27 percent in local currency terms.
Japan’s Nikkei .N225 and the S&P 500 are both ahead by almost 20 percent, while the Dow has risen by a quarter. In Europe, the German DAX .GDAXI has gained nearly 14 percent, though the UK FTSE .FTSE has lagged a little with a rise of 7 percent.
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 James.
“Globalization and technological change have been influential in keeping inflation low. In short, consumers can buy goods whenever they want and wherever they are.” Yet there are reasons to suspect that times this good cannot last.
An index from State Street that gauges investor risk appetite by what they actually buy and sell, suffered its six straight monthly fall in December.
“While the broader economic outlook appears increasingly rosy, as captured by measures of consumer and business confidence, the more cautious nature of investors hints at a concern that markets may have already discounted much of the good news,” said Michael Metcalfe, State Street’s head of global macro strategy.
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 center stage.
