The Australian Equities market in 2017 can be best described as three distinct periods: 1) the Trump trade; 2) the Range trade; and 3) the Goldilocks trade. The Trump trade carried into the year the reflation theme of 2016 – this saw the ASX 200 Bank Index rise 5.6% in Q1 as expectations of higher inflation and growth fuelled a cycling recovery.
The optimism soon faded, with President Trump’s policy reforms hitting road blocks in Congress, falling bond yields and uncertainly led the market sideways trapped within a narrow range between 5630 and 5850 index points.
In the back half of the year global uncertainty eased and volatility all but disappeared, the growth without inflation environment or ‘Goldilocks trade’ buoyed the markets towards the end of the year.
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