Swissquote’s Outlook

What to expect in 2018

Which events will cause turmoil on the markets?

Peter Rosenstreich, Head of Market Strategy at Swissquote, knows about trending topics and shares his economic outlook for the coming year.


FED – Risk appetite continues

The movement of global asset prices will be directly linked to the policy decisions of the Fed and other central banks. Expansionary monetary policy is the primary reason for current stretched valuations. Until there is a concentrated effort towards “normalization” by a group of central banks, risk appetite will be blindly supported. While many developed market central banks are asking markets to patient, the Fed is coiled, ready to spring into action should inflation pick up. We anticipate 2.2% GDP growth for the US economy in 2018, and a tightening labour market should push core PCE inflation back to 2.0%.

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Europe is improving economically

Heading into 2018, Europe is improving economically, despite what may be the end of Merkel’s era. Historically, the EU has been plagued by concerns of fragmentation, with fears that small issues would eventually break up the union. However, we believe that is no longer the case thanks to the powerful trio of Macron, Merkel and Draghi. It is a theory that will have a profound effect on pricing in events such as the Italian elections.

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China’s new role as a global leader

China’s economy is expected to slow slightly in 2018 from 6.6%, due to a prudently managed monetary policy tightening, which is targeting slowing lending through China’s “shadow” financial system. Yet, empowered by the volatile behavior of President Trump, China has embraced its new role as regional and global leader. Heading into 2018, the world needs to work with a confident and economically massive China.

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The rising trend of cryptocurrencies

The actions of global central banks over the last 40 years have totally eroded people’s confidence in government’s monopoly over money. The Fed created $4 trillion out of thin air as part of $20 trillion globally in balance-sheet expansion. We recognize that part of the appreciation of alt-coins is due to speculative trading and revolutionary technologies, but most users are average people who no longer trust the government to protect their wealth. While corrections are unavoidable, alt-coins are here to stay.

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Emerging markets will grow

Emerging markets (EM) have continued to grow faster than developed markets, with higher returns in 2017. The trend will likely continue in 2018. GDP growth in emerging markets for 2017 is expected to be 4.5% – its highest point since 2015 – versus 2.10% for developed markets. Protectionism was a buzzword for early 2017, as Trump quickly withdrew from the TPP and challenged NAFTA. The rhetoric quickly died down, however, and global trade picked up pace.

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Special Webinar

Our expert Peter Rosenstreich will dedicate this Webinar to the Market Outlook 2018. Which trends and developments can we expect for the upcoming financial year?