Most world stocks markets were set to finish 2016 in positive territory despite shock votes in Britain and the United States, but the outlook for 2017 is clouded by looming European elections and Brexit. This year witnessed a wave of anti-establishment populism, which saw Britain vote to leave the EU and maverick billionaire businessman Donald Trump elected as US president.
Both unexpected outcomes sparked a brief tumble on global equity markets — but many have since staged a stunning recovery to finish 2016 in the black.
London’s FTSE 100 has gained 14.3 percent over the year, while Frankfurt’s DAX 30 added about 6.7 percent and the Paris CAC 40 won 4.6 percent.
Since Brexit, London’s FTSE 100 blue-chip index has soared to end the year in record-breaking form, as the British economy shrugged off the impact of the impending divorce from the EU.
In a half-day of trading today, the FTSE 100 set a new intraday and closing high of 7,142.83 points.
Prime Minister Theresa May has vowed to trigger the two-year EU exit process by the end of next March.
“Fears of an imminent UK recession following Brexit proved wide of the mark thanks largely to the resilience of consumer spending,” NFS Macro analyst Nick Stamenkovic told AFP.
“Indeed, Brexit was viewed as a local rather than global issue, prompting a sharp turnaround in the fortunes of world stock markets.”
Markets also briefly tanked on November 9 after Republican Trump defeated Democrat market favourite Hillary Clinton to capture the White House.
Yet Wall Street has since enjoyed a blockbuster run with the Dow Jones Industrial Average now on the cusp of 20,000 points.
New York has been boosted by expectations that Trump — who will be inaugurated on January 20 — will honour election pledges to ramp up infrastructure spending, cut taxes and boost businesses.
“Rising optimism over possible tax reforms, increased infrastructure spending and reduced regulation have provided a spur for Wall Street — but there is a risk of disappointment once Trump becomes president in January 2017,” cautioned Stamenkovic.
Looking ahead to 2017, the spotlight is now on upcoming European elections. The Netherlands heads to the polls in March, followed by France in May, and Germany in the autumn.
“Populism is the rising mood of the moment,” London Capital Group analyst Ipek Ozkardeskaya told AFP.