After strong gains in global equity markets from March 2009 onwards, 2015 turned out to be a somewhat trickier year for equity investors.
For the year as a whole, the US and UK markets made modest losses and European markets made reasonable gains.
The US S&P 500 lost 0.4%; the Dow Jones lost 1.9%; and the UK FTSE 100 shed 4.9%.
In contrast, the German DAX gained 9.6%; the French CAC gained 8.5%; and the Irish market delivered stellar gains of almost 30%.
The Japanese Nikkei was flat.
Given all of the significant uncertainties that prevailed during the year, these markets are pretty impressive in the circumstances.
The key uncertainties included the Greek crisis; the sharp slowdown in the Chinese economy and the consequent currency adjustment in early August; the eventual turn in US monetary policy; and the less than stellar performance of the eurozone economy.
Alas, in the early days of the new year, the mood music has turned distinctly less positive and as traders return to their desks, nervousness abounds.
In the first trading day of the year, markets took a significant hit, with the FTSE 100 losing 2.4% and the German DAX shedding 4.3%.
The markets have been scared by a number of recent geopolitical and economic events.
Poor manufacturing numbers out of China prompted a sharp fall of 7% in the Chinese equity market and under new anti-volatility rules, trading was suspended on the Chinese exchange.
This prompted significant nervousness in already nervous markets.
The nervousness was compounded by a further decline in the US manufacturing index.
This prompted concerns that the Federal Reserve may have acted prematurely in December when it increased interest rates for the first time since 2006.
On the geopolitical front, the executions in Saudi Arabia has sparked a predictably very negative reaction from Iran and tensions between the two countries now look quite dangerous.
For markets that put in a far from convincing performance in the second half of last year, the economic and geopolitical developments of the past week have just provided an excuse for a sell-off in the early days of the new year.
While it is always dangerous to read too much into trading conditions in the early days of any year, it is clear markets will face considerable nervousness and volatility over the coming months.
The health of the US economy, the path of US monetary policy, the sluggish nature of eurozone growth, and tensions in the Middle East will all test the market’s stomach.
After such strong gains since 2009, it was inevitable markets would eventually run out of steam at some stage.
At the beginning of 2014, I had a fear that the market performance would begin to peter out that year, but that did not transpire.
This time last year I was predicting that it would happen in 2015.
That prediction looked forlorn by mid-year, but in the second half of the year a more serious level of nervousness and volatility started to creep in and it turned out to be a much more difficult year, at least in the US and UK.
Europe did reasonably well.
However, the notion that equity markets represented a one-way bet was seriously questioned.
As 2016 gets under way, market attention will focus on US interest rate uncertainties, the very obvious difficulties in the Chinese economy, the impact of lower commodity prices on the emerging economies, and more developed economies such as Canada and Australia.
Of course, closer to home, Brexit has the potential to cause much nervousness.
In an environment of nervousness, such as we are experiencing at the moment, there will inevitably be a tendency for investors to pile into safe-haven assets such as cash, government bonds and gold.
While it is too early to judge the year based on a few days trading, it looks likely that nervousness and volatility will be a key feature of global equity markets for the moment at least.
For Ireland, as we face into an election, the uncertain global outlook should garner caution in terms of electoral promises.
However, that is unlikely to happen. It never does.
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