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Global Equities Enjoy A Steady Run

January 9, 2018

 

Global stocks last year enjoyed their best yearly performance since the 2007-2008 crisis recovery.  This come as accelerating economic growth across the world helped power several major markets. The FTSE All-World index rose 22% in 2017. The S&P 500 benchmark gained 19% in the past 12 months, its sixth best annual performance over the past two decades. Analysts are predicting another good year for the U.S. equity market, forecasting the first double-digit growth in earnings since 2011.

 

The biggest factor behind the stock market rally has been the accelerating growth in the U.S., Europe and Asia. Global growth continues to be driven by industrial activity and investment. The UK’s FTSE 100 has also played a part in the growth, rising another 5% this month. The gains were fueled by a recovery in commodity prices, which lifted many of the natural resource companies based in London.

 

Contrary to expectations at the start of the year, global bond markets have also seen a great year. Many investors and analysts had expected that the combination of the election of President Donald Trump, tighter monetary policy, and accelerating inflation would end a three-decade bull run for bonds. On the other hand, the Bloomberg Barclays Global Aggregate, a broad $50tn fixed-income benchmark, has returned over 7% this year.

“Global equity markets, as well as bond markets outperformed this year and I think that’s going to continue through the new year.” said Keith Knutsson of Integrale Advisors.

 

After a great holiday shopping season, retailers are bracing for an influx of returns. In 2017, traditional and online retailers have expanded the number of locations and ways consumers can return merchandise. Some of the new features will include in-store return kiosks, return lockers in the mall, parcel shipping locations, and at-home pickup.

 

“A lot more retailers are offering options for the convenience of the consumer in order to enhance and promote customer loyalty” said Keith Knutsson of Integrale Advisors.

 

Amazon Inc. said it has expanded options for in-person returns this year, with a network of 2,000 “locker” locations, including 400 at Whole Foods stores, where customers can drop off items to be returned. Amazon also partnered with Kohl’s Corporation in Chicago and Los Angeles, which are now accepting returns of Amazon goods purchased online.

 

Wal-Mart Stores Inc. introduced its new express return kiosks, located in its stores, where customers can complete the return process in less than five minutes and receive a refund within the duration of that day.

As shoppers increasingly turned to the internet for their holiday purchases this year, they were more likely to order from online retailers with fast delivery and an easy return process. According to Adobe, online holiday sales are expected to top $107 billion this year, an increase of 13.8% over 2016.

 

With higher volumes of merchandise coming back through a wider variety of channels this year, analysts say handling the reverse supply chain can be costly. Those returns will require additional manual work because every item shipped back must be inspected for damages. By the time returned goods make their way back to the shelf, they could be selling at a discount, causing retailers to potentially take a loss. The logistics of returning an item continue to grow in complexity, causing companies to become more innovative, and adjust to the increase in returns.

 

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