December 2016 – ADIFO Global Market Review
The S&P500 index ended the year up 9.5% (12% including dividends), its 8th consecutive positive calendar gain. Since dropping to a bear market low in March 2009, the index has achieved a total return of +291% through the close of 2016, an average gain of 1.5% per month. For the full year, the performance of the S&P500 was surpassed only by the FTSE100, whose international dollar-earning companies benefited from the plunge in the Pound following the BREXIT vote. The UK primary stock ex- change rose 14.4% for the year, offset by a -16.3% decline in the currency. The rally in Japanese equities, which we flagged in October as having the strongest reading in out technical scoring methodology, continued unabated as the Yen weakened, gaining 16.2% in local currency in the Q4. European markets were the strongest performers in December amidst sign of stronger economic growth in Germany (the DAX gained 7.9%) and as European inflation turned higher, reviving hopes that deflationary forces on the continent had been tamed. Emerging markets were again the worst performers in December as concerns remain over a strong dollar and a potential rise in protectionism under a Trump government. Chinese equities led the decline, losing –4.1% in December and was negative over the full year.