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Top 5 Things That Moved Markets This Past Year

What will 2018 bring? – Take a peek at the top 5 things that rocked U.S. markets this year.

Cryptocurrencies Hit The Big Time

Bitcoin's meteoric rise in 2017 sparked cryptomania as investors desperately attempted to get a piece of the action. Bitcoin showed its resilience in 2017, shrugging off regulatory pressures, competition from rival cryptocurrencies and numerous splits or so-called hard forks.

The popular digital currency boasts a return of more than 1400% since the beginning of the year, dwarfing the returns of the traditional benchmarks like the S&P 500.

Investors also welcomed the arrival of new cryptocurrency as Bitcoin Cash was created in August following a split in bitcoin’s blockchain – the digital ledger which records every bitcoin transaction – in an event know as a ‘hard fork’.

The creation of Bitcoin Cash came as concerns grew over the slow speed of transactions on the bitcoin network. With the ability to process transactions not only faster but also cheaper, Bitcoin Cash has surged more than 1000% from its 52-week low.

As 2017 draws to an end, however, interest in bitcoin has waned giving way to the rise of Ripple XRP as the digital currency soared above $1.9 for the first time in its 5-year history.

Ripple simplifies the way financial institutions like banks process their customers’ payments around the world.

“Ripple connects banks, payment providers and digital asset exchanges via RippleNet to provide one frictionless experience to send money globally,” A recent McKinsey study noted.

The native currency of Ripple is XRP – and there’s a finite amount of XRP in existence.

US Stocks Made Multiple Record Highs

The Dow Jones, NASDAQ Composite and S&P 500 notched multiple record high through 2017 as bullish earnings and the prospect of stock market-friendly legislation lifting US economic growth fuelled the rally.

President Donald Trump scored his first major legislation victory as lawmakers passed the Tax Cuts and Jobs Act in December, which is widely said to be the biggest overhaul of the U.S. tax system in three decades and includes a provision to slash the corporate tax rate to 21% from 35%.

The prospect of lower taxes was one of the major catalysts for the move higher in the three main US indexes as investors placed bullish bets on US equities amid expectations that tax cuts would encourage companies to ramp up capital expenditure and buybacks.

WTI Crude Settled Above $60 For First Time Since 2015

WTI crude oil prices gained more than 12% in 2017, settling above $60 for the first time since mid-2015 as OPEC’s strong compliance with the deal to curb output fuelled optimism.

In a sign of commitment to reining in excess supplies of oil, OPEC agreed in November to extend joint production cuts with Russia of 1.8 million barrels per day through 2018. That lifted investor expectations that market rebalancing will gather pace as global demand is expected to rise.

Also adding to optimism on oil prices were recent pipeline outages in the North Sea and Libya.

Rising oil output in the US, however, has capped gains somewhat as market participants expect US shale producers to ramp up output.

Crude futures for February delivery rose 1% to settle at $60.42 a barrel.

The Bank of England Hiked Rates, First Time in Decade

The Bank of England raised rates to 0.5% from 0.25% in November but tempered expectations for further rate increases, warning that Brexit uncertainties pose risks to UK economic growth.

The Bank of England’s first rate hike in more than decade came as signs of progress on Brexit negotiations prevailed after the UK agreed to pay up to €50 billion to settle the so-called divorce bill. With the divorce bill out of the way, investors look ahead to UK, EU negotiations on a crucial trade deal.

The rate hike and less uncertainty surrounding Brexit negotiations supported a move higher in sterling as it rose to its highest since June 2016.

GBP/USD rose 0.47% to $1.35.

Gold Prices Notched Best Performance Since 2010

Despite the Federal Reserve raising its benchmark rate for a third time this year in December, gold notched its best year since 2010 as dollar weakness supported sentiment on the precious metal.

Also supporting gold prices through 2017 were a swathe geopolitical crises as North Korea leader Kim Jong-un and U.S. President Donald Trump traded numerous verbal blows, while Eurozone political uncertainty continued amid unexpected election results in Germany and Spain.

Gold prices rose to $1,304 on Friday.

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