A Look Back at 2017

In a year that saw equity indexes around the globe setting new record highs in what seemed like week after week, there were a few underlying market themes that made for some of the more popular stories over the past year. One of the more common topics discussed by the financial media was the lack of volatility that continues to remain in place across not just equity markets, but also currencies, commodities, and treasuries. Every time there was any type of jump in the VIX Index, it was typically short lived. On November 24, 2017, the VIX printed a new all-time low of 8.56. This lack of "fear" in the market helped keep any correction in stock prices short lived. During 2017, domestic large cap stocks tended to outperform small cap stocks by a fairly wide margin. In terms of sector performance it was Technology, Semiconductors, and Healthcare that saw some of the largest gains over the past year, while others such as Retail, Real Estate, and Energy tended to lag. When comparing the main US Stock Benchmarks, the Nasdaq-100 produced the highest return over the past year, notching gains of 31.76%.

Despite the fact the Federal Reserve Bank raised interest rates three times during 2017, the US Dollar (and currency markets in general) continued to remain quiet for the majority of the year. In fact, the EUR/USD was said to have traded in the narrowest range on record since the inception of the spot rate. Due to an increased presence of Fed activity mentioned earlier, US Treasury yields were another area of the market gaining a lot of attention. The main story here was the flattening of the yield curve, and more specifically the 2/10 spread which started the year at 125 bps and finished at just 51bps.

Finally, one of the most surprising themes of the year was the strength seen in emerging market equities (NQEM: 34.3%), which outperformed those from developed markets (NQDM: 20.54%). As emerging markets around the world continue to see prospects for improving economic growth, money has continued to flow to both their currencies and equities. The majority of commodities markets continued to trade in narrow ranges, there were however a few exceptions into year end. The strong flows into emerging markets certainly helped add to the strong performance of copper, which was the top performing commodity of 2017 and notched gains of 31.3%. Much of this was due to a very strong month of December, which over the last two weeks saw copper finish higher 12 days in a row. On the flip side, Natural Gas (-20.7%), Sugar (-22.1%) and Orange Juice (-31.4%) were the three worst performing commodities.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.