The year is almost over. Its biggest event as far as markets are concerned — the first rise in US interest rates in almost a decade — is still ahead, but now seems a certainty.
At the outset of 2015, there was a consensus that the Federal Reserve would start to raise rates, and that the European Central Bank, far more reluctant to ease monetary policy, would be obliged to resort to quantitative easing to support its economy.
The Federal Reserve, following the broadly positive US employment report for November, is almost certain to raise rates this month. The ECB last week has cut rates and extended quantitative easing again.
For stock markets in 2015, the major markets are almost exactly where they started the year, in US dollar terms.
But that does not account for how they got there during the year. At the year’s outset, many thought the Fed would be well into its tightening cycle by now. Two months ago, after the summer panic over China, all thoughts of a rate rise this year had been abandoned.  Now it is back on the table.
European equities were expected to have more impressive gains, before the China crisis, the midsummer mess over Greece, the Volkswagen scandal and poor corporate results capped European equity performance.
Here in Australia, the continued weakness in commodity prices, the bank capital raises, and the Brazilian dam disaster at the BHP owned mine negatively affected the equity market, even while the Australian economy performed above expectations.
In 2016 currencies will once again play a major role. The dollar has strengthened by almost 9 per cent for the year and this strengthening of the US dollar will continue to be a major theme in 2016.
Also at the moment the World Economy is not very exciting, but growing and expected to pick up in 2016. China’s growth is slower than it was but stabilising. Europe’s growth appears to be improving, but not strong enough to remove some of the gloom. The US is a bright spot, and Australia has navigated the mining to dining transition better than anyone expected, even the RBA.
Unfortunately, investors’ confidence is still weak and too reliant on central banks and this will continue to lead to volatility in the markets. We saw this again last week after the ECB announcement disappointed the markets.
Like 2015, 2016 is looking like a long strange journey for markets.