The year ended on a positive note with equity markets providing strong returns while there was a de-escalation of geo-political risks particularly in relation to the trade wars.
However, as one risk recedes another emerges, as tensions in the Middle East materialised causing oil prices to rise as the US warned of increased threats to energy facilities in the Middle East, after the recent assassination of an Iranian general.
Last year was characterised by broad-based asset price performance, with all the major asset classes generating significantly above-average returns. As we head into next year, markets are anticipating another year of strong equity market performance.
This is predicated on better economic and corporate earnings growth, supported by reduced political risk now that we have a phase-one trade deal between the US and China and a resolution of UK parliamentary deadlock.
However, above-trend economic growth and corporate earnings growing in the mid-teens are baked into consensus expectations, so there is ample room for disappointment if the business cycle remains sluggish and downward pressure on profit margins persists.