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Mackenzie Chief Economist Todd Mattina analyzes issues and implications of the results of Italy’s constitutional referendum.
It was a strong quarter for equities. The MSCI World index returned 5.4% in local currency terms and has gained for 14 consecutive months dating back to November 2016, which is the longest string of positive monthly returns since its inception in December 1969.
From North Korea to the chaotic Trump White House, geopolitical risks made headlines again last quarter. However, despite the headline noise, the MSCI World Index returned 3.9% for the quarter in local currency terms, a reminder that headline based investing is rarely rewarding.
Equity and bond markets generally ended higher for the quarter but if not for hawkish central bank statements at the end of the June from the European Central Bank, Bank of England, and Bank of Canada, which sent both equity and bond markets lower, returns may have been significantly better.
Markets were heavily influenced in the first quarter by political factors revolving around U.S. President Donald Trump. Equity markets were powered to new highs during the quarter in what has been called the “Trump Trade” or “Trump Bump”, but perhaps more accurately reflects ongoing improvement in the U.S. and global economy. On balance, that mix of factors pushed risky assets up and led to the first U.S. Fed rate hike of 2017 in March.