Investors ponder the effects of President Trump on golbal markets.

The year begins with investors pondering the effect that President Trump will have on markets around the world as well as on regions and key international relationships. So far the start to the year has been relatively positive, certainly compared to last year when oil prices and Chinese markets were in the headlights.

• Global macro: Financial markets have kicked off 2017 on a more positive note than they started 2016: the S&P500 hit a new record high and the Dow Jones Industrial Average continued to flirt with 20,000. Despite correections in the dollar and US interest rates the trend is probably still positive for both.
• GCC macro: Planned cuts to output in H1 2017 will prove a headwind to growth, but we think non-oil growth prospects are looking better this year.  Higher oil prices should reduce the need for further spending cuts and lower borrowing requirements. Increased infrastructure investment will support growth in the UAE and Qatar.    
• MENA macro: In North Africa and the Levant, the start of 2017 holds some promise that economic conditions are finally set to improve across the region.
• Fixed Income: The year has begun well for fixed income investors with global sovereign and corporate bonds recording positive returns during the month and retracing some of the losses that ensued from material increase in yields post the surprise outcome of the US election late last year.
• Currencies: Both the dollar and sterling are likely to have lively a year, with the main themes of 2017 being related to the impact of Donald Trump on the US economy and the wider world, and Brexit which could cause further losses for the pound before it eventually moves higher.
• Equities: The exuberance since the election of Donald Trump as US President has given way to caution at the start of 2017. While the change in risk appetite is more visible in other asset classes, global equities have so far remained steady.
• Commodities: Oil markets have started 2017 on a more positive footing thanks to OPEC's decision to cut production by 1.2m b/d. It will be several more weeks before clear data is available on how effective the cuts have been at helping to tighten up oil markets. Gold has moved a step lower since the US election and we some more downside ahead.