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Mackenzie Chief Economist Todd Mattina analyzes issues and implications of the results of Italy’s constitutional referendum.
The first quarter of 2018 proved to be significantly different from the last few years, as volatility returned to markets. Equities started the year on a strong footing, continuing on the path of the last two years, as investors cheered solid growth numbers and positive corporate earnings releases.
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.