2018 US Markets:

  • Return of volatility:  S&P 500 was up or down more than 1% nine times in December alone, compared to eight times in all of 2017. It moved that much 64 times during 2018.
  • S&P 500 reached an all-time high (2941) on September 20th, at which point it was up over ~11% for the year.
    • A bear market followed in the 4th quarter as the S&P briefly fell 20% (the bulls will say 19.9%) from that peak, closing at a low on Christmas Eve before rebounding over 6% during the last week of the year.
  • 2018 total return for the S&P was -4.38%, worst year for US stocks since 2008 and only the second year in the past decade where both the Dow and S&P ended with negative returns (2015 barely negative).
  • Negatives affecting US market:
    • Fed raising short term target interest rates (4x to 2.25-2.5% range)
    • Weaker Chinese growth
    • Rising geopolitical concerns (ongoing trade conflict between the US and China, Brexit and Italian politics) and crises in Turkey and Argentina.
  • US economic data and solid 20%+ earnings growth were the stabilizers.
    • US fared much better than both developed and emerging international equities.

2018 Global Markets:

  • In 2018 Brexit’s impact on the United Kingdom and Europe worried investors, as did a slowdown in the Chinese economy.
  • FTSE All-World index, dropped 12% in 2018.
    • Worst performance since global financial crisis, and sharp reversal from a gain of nearly 25% in 2017.
  • Market damage this year was most pronounced in China
    • World’s second largest economy is feeling the effects of a darkening trade outlook and government attempts to rein in risky lending after rapid rise in debt levels.
  • Shanghai Composite entered bear market in June and declined nearly 25% since start of the year. The Shenzhen Composite – includes many of the country’s tech firms – dropped by more than 33% Hong Kong Hang Seng is down 14%.

Link to more detailed write-up covering more asset classes/geographic regions: https://www.schroders.com/en/insights/economics/financial-markets-2018-the-year-in-review/