In the markets: What to watch this week

As the year draws to a close and many market participants go on holiday to enjoy a much-needed end to 2016’s storm, there is not much left on the table until the new year brings about new opportunities.

Many investors will be hoping that 2017 is nothing like 2016 as the world awash with cash and nowhere to put it has made investing extremely volatile. I think many can agree it has been a tough year.

Over the year, most stock exchanges – apart from those in the US – didn't perform very well.

The average annual return for the S&P 500 is around 10% a year and this year it has grown over 9% so far while the dollar index is up around 4%.

Other stock exchanges like the Top40, EuroStoxx 50, Hang Seng and Nikkei had performed as follows: -3.9%, +0.4, -1.1 and +8.6%.

The UK’s FTSE 100 was up 15% but when you take into consideration the losses in sterling, of 16.6%, any pound-based investment seemed hard to justify.

The rand strengthened nearly 8% this year while the euro, Hong Kong dollar, and yen came in at around -3.7%, -0.1% and +3.6% respectively so far this year.

Most commodities did very well this year as “soft” commodities were largely poor performers.

One of the pieces of data that traders will be looking forward to is the GDP figures up to the third quarter of 2016 coming out of the US but major trend developments aren’t anticipated with the end-of-year vacation.

Some short-term volatility is expected as liquidity dries up and irregular price moves tend to occur during these kinds of periods.

Until next year.

Giacomo Bonavera is head of foreign exchange trading at Capilis Asset Managers. Click here to visit the firm’s website.