April 26, 2017

First Quarter Highlights

Financial Markets

  • Equity markets around the world rallied boosted by improving economic activity along with business and consumer confidence rising sharply. The S&P 500 index had its biggest quarterly return since 2015. Several indices set new all-time highs including the Dow Jones Industrial Average, which set record highs for 12 consecutive days, the Nasdaq, the United Kingdom (UK) FTSE 100, and the index of Mexican equities.
  • As uncertainty grew about whether Trump’s pro-growth agenda will be enacted, performance leadership shifted from sectors that would benefit from Trump’s policies to sectors that can grow with the economy without tax cuts or more fiscal spending. Less risk of protectionist trade policies provided a boost to emerging markets.
  • Bond yields traded in a tight range so returns were modest.
  • Commodities was the only asset class to decline due to the drop in oil prices on high supply levels.

Overview of the Economy

  • In the U.S., improvements were reported in manufacturing, the housing market, and the labor market. Consumer confidence spiked to a 16-year high.
  • Manufacturing purchasing managers’ index (PMI) readings are improving around the world. PMI numbers from the eurozone were at their highest levels since 2011. Unemployment in the eurozone fell to the lowest level since 2009.

Notable Events

  • The U.S. Federal Reserve Open Market Committee (Fed) raised its federal funds rate by 0.25%.
  • On March 29, the UK triggered Article 50 which officially began the two year process of negotiating the UK’s exit from the European Union (EU) known as Brexit.

For an in depth analysis of the quarter, please download the PDF.