Stock markets defied political uncertainties

Stock markets in 2017 were again exposed to numerous potentially unsettling factors. In the wake of the surprising outcomes of the Brexit referendum and the US elections in 2016, many market players feared further uncertainty in the EU or the Eurozone in connection with national elections in France and the Netherlands. These concerns proved to be unfounded, however, and even real factors such as the overhaul of international trade agreements and the sluggish progress in forming a government in Germany had little impact on financial markets, which proved to be astonishingly robust and in the case of the Eurozone even surprisingly sprightly. An exception here was the comparatively muted performance of UK stock markets as negotiations dragged between the EU and the UK following the Brexit vote.

The German DAX index started the year at 11,481 points, which also proved to be its lowest level of the period under review. German blue chips enjoyed a broadly positive performance from the beginning of the year until the summer, albeit with certain modest setbacks. The continued expansionary monetary policy pursued by the European Central Bank (ECB), coupled with a good performance on the corporate side and a robust world economy, had positive implications for valuations on the capital markets. After taking a breather over the summer the DAX picked up significant momentum again, touching its high for the year of 13,479 on 3 November 2017. The German stock index closed out the year at 12,918 with a gain of 12.5%.

The MDAX fared even more favourably, kicking off the year at 22,189 points and climbing to an interim high of 26,696 on 2 June 2017. After moving sideways for a while over the summer months, the index surged higher again to reach its peak for the year of 27,027 shortly before year-end on 30 November. The MDAX ultimately closed out the year at 26,201 points with a gain of 18.1%. The performance of the Dow Jones in the United States was even more positive: spurred on by the “Trump effect” and the major tax reform package passed by the Senate at the end of the year, it soared to 24,719 and posted an annual gain of 25.1%.