Market Highlights - A look back at December 2017

Australian Economy – Another quarter and yet another positive GDP figure with Australia's economy growing by 0.6% from July to September1. This brought the year-on-year GDP growth to 2.8%, its highest level since June 2016. The unemployment rate has remained steady at 5.4% into the end of the year, with another 22,200 jobs being added in November.

Global Economy – Trump and the Republicans delivered on one of their key economic policies by pushing through significant reform to US taxes, in particular, the slashing of the corporate tax rate from 35% to 21%. On the economic front, most indicators are still looking positive, with unemployment remaining near record lows at 4.1%2. Across the Atlantic, European economies have shown steady and improving growth over the past year against the backdrop of the looming exit of the UK from the common market.

Investment Markets – Other than Europe, most equity markets finished the year off strongly. Many markets had a terrific 2017, with the Hang Seng among the best performers with returns of above 35%. The US, Japan and China were all up around 20%, however Australia and Europe were the laggards for 2017, with stock prices in these markets rising about 7%3.

Outlook – The large tax break for US corporates has been a major driver of returns for the recent past. Investors will be looking for signs that the tax reform will be a dynamic source of economic growth rather than simply becoming a static line on annual financials.

S&P/ASX 200 – 12 months to 31 December 2017

Source: Core Equity Services

Footnotes: 1. Australian Bureau of Statistics; 2. US Dept of Labor; 3. Bloomberg data.

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