The Big Events that Shook the Financial Markets in 2017

Shocks to the financial markets through 2017 were somewhat few and far between, with market volatility considered to be amongst the lowest on record. The shocks that did shake the markets were certainly less significant by historical terms, with investors seeing any dips as an opportunity rather than a likely correction.

That being said, the year saw some events that were more significant than others and hit the markets, albeit for a short period of time.

2017 Events of the Year

• The French General Election in April saw Marine Le Pen taken center stage, with the markets in somewhat of a panic over whether France could be next to head for the EU exit door. Macron eventually came out on top in the 2^nd round ahead of which the market tensions had already eased. Europe had managed to dodge another anti-EU political shift, with the Dutch and German elections also supporting the mainstream governments.
• Theresa May’s Snap General Election on 8^th June 2017 was perhaps the Prime Minister’s gravest error since taking over from David Cameron in the wake of the EU Referendum. The Tories lost their majority in a hung parliament that saw May have to turn to the DUP to form a coalition government.
• The U.S Tax Reform Bill was finally signed by the U.S President on 22^nd December 2017. While the actual event in the Oval Office had little impact on the markets, the passage of the bill and tax bill chatter through the year were of influence. Trump’s failure to repeal the Obamacare bill had raised doubts about the President’s ability to garner the necessary support to push through much talked about growth policies.
• Catalonia General Election vote 21^st December 2017 saw the European equity markets take a hit. Following the Independence Referendum in October that had also weighed on the markets, concerns over independence and internal conflict have been on the rise, with the Catalan region accounting for a significant proportion of Spain’s economy.
• North Korea’s missile tests certainly tested the markets’ resolve. The first of the intercontinental ballistic missile tests came on 4^th July, which put the U.S in range. While the tests were not on any nation, one flying over Japan was perhaps the most threatening. The greater concern was a possible strike by the U.S in response to threats from the North Korean leader, with China also getting involved, saying that China would intervene in the event of a U.S first strike.
• Capitol Hill Chatter was relentless throughout the year. FBI Director James Comey’s sacking in May led to the appointment of former FBI director Robert Mueller as special counsel to investigate Russia’s involvement in the 2016 election. Special Counsel Mueller’s ongoing investigations into the U.S President’s election campaign took a lot of the spotlight, particularly as Mueller got ever closer to the President himself, following an uncovering of son-in-law Kushner and former national security advisor Michael Flynn’s lies. Trump tweets, talks of trade tariffs, the threat of imposing fresh sanctions on Iran, the response to the Charlottesville violence and his failures to deliver on certain policy pledges were also of influence.
• Terrorist Attacks were aplenty in 2017 as ISIS stepped up its war against the West while facing defeat in the Middle East. The markets responded to the more significant attacks, which included the Istanbul Nightclub shooting on New Year’s Eve, multiple attacks in the UK, including two in Central London. Attacks also took place in France and Germany and even the U.S, with the Las Vegas shooting. There were reportedly 1,099 terrorist attacks killing 7,455 people in 2017 according to Esri.

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With Cboe’s Volatility Index sitting at close to record lows throughout 2017, there are expectations for this to pick up, which could see the markets become more sensitive to major events over the coming year and lead to lengthier declines than seen through 2017. The first real test may come from Italy’s General Election in March, with Italian equities having already taken a hit upon the announcement.