â– S&P 500 sees 9.5% annual gain in 2016, in spite of selling pressure this week
â– 2016 Gains in European equity have been eroded by weakening of EUR, GBP
â– Oil prices stabilize close to USD 54 per barrel
â– 4-day rally aids gold to 8.1% annual gain
â– Bitcoin prices surge no less than 120% in 2016
Following the end of the Fed’s quantitative easing programs, it seemed that investors were unlikely to continue to benefit from gains in the markets for a while. Indeed, 2015 faced a considerable amount of headwind dragging the S&P to a 0.7% annual loss. Things didn’t start off too well for 2016 either, with heavy losses extending into the middle of February. Later gains, however, and the boost from the victory of Trump at the U.S. elections, have aided the index deep into the green. The last trading week saw investors cashing in for some of this profit, scalping about a percentage point from its value, but the index still secured a 9.5% annual increase closing at 2,238.83 points on Friday. The Dow, similarly, failed to hit 20K, having peaked at 19,987 points on December’ 20th, but then again add upwards of 13.4% for the year is quite an achievement.
Gains aren’t restricted to one side of the Atlantic, with Europe benefiting not only from the U.S. rally, but also from the ECB’s accommodative policy. The DAX secured a 6.9% increase for the year, while the CAC 40 advanced 4.9%. It’s worth noting, in this respect that the relative tightening of U.S. monetary policy vs. the Eurozone has lead the EUR weakening about 3.2% vs. the Dollar annually, so accommodation did impose costs on Euro investors. The FTSE 100, similarly, surged 14.4% for the year, but adjusting for a 16.3% annual decline in GBP/USD makes being long on U.K. stocks a rather unattractive option.
Was 2007-2016 the real lost decade?
Oil investors have also had a fairly good year. They’ve, however suffered a small downward nudge on Wednesday, amid American Petroleum Institute reports that crude inventories have increased by 4.2 m barrels – the biggest gain in six weeks. Subsequent declines marked the end of an 8-day rally. On the other hand, prices have proven fairly resilient to the inventory gains closing at USD 53.72 per barrel on Friday, which means no less than a 45% increase for the year as a whole.
