December 22, 2016 / 11:02 AM / in 10 months

Wall Street and oil take the 2016 spoils

LONDON, Dec 22 (Reuters) - Oil is set to be 2016’s top market performer, with its near 50 percent gain an outcome few would have predicted when it plunged to a 12-year low in January.

In a year of shocks, including Britain’s vote to leave the European Union and Donald Trump’s election as U.S. president, several major assets have been on a rollercoaster.

“(Given) the fragility that markets started the year with and the events that then happened ... it is pretty remarkable how resilient things have been,” State Street Global Markets head of macro strategy Michael Metcalfe said.

Crude surged from as low as $27 a barrel to just shy of $58 following two of its worst performing years on record. It dovetailed with large gains from copper zinc and tin, and in currencies like Russia’s rouble and Brazil’s real which are both up 17 percent.

Many stocks have not done badly for investors.

On Wall Street, the S&P 500 and Dow Jones are up 12 and 14 percent, respectively, with gains accelerating after Trump’s victory.

Tokyo’s Nikkei is 5 percent higher in dollar terms while a 7 percent gain for emerging market stocks will end a poor three-year run.

The dollar has risen for a third straight year, with all its 4.5 percent gains against a basket of major currencies coming since the U.S. election.

The yen is still clinging on to a 2 percent gain despite a 12 percent plunge since the U.S. election. The euro is down 4.5 percent.

Brexit-battered sterling had the worst year of the FX majors. It has lost 16 percent on the dollar and 12 percent against the euro, never recovering from a plunge to a 31-year low the day after the EU vote.

That’s less than the Mexican peso’s 15 percent drop and roughly the same as the Turkish lira which has had to contend with a failed coup attempt, a crackdown on tens of thousands of officials and a string of bombings.

London’s FTSE has boomed since Brexit, up 18 percent since the June vote, although almost flat on the year.

“Sterling’s weakness has been very good for large-cap UK equities and we expect that relationship to hold,” said JP Morgan Asset Management global market strategist Mike Bell.

“So we could have that slightly bizarre environment whereby bad news for the UK economy is good news for UK equity market.”

METALS SHINE

Benchmark 10-year U.S. Treasuries are level for the year but have lost 5 percent since Donald Trump’s election and last week’s quarter-point rise in U.S. interest rates.

Other fixed income markets have followed. German Bunds have lost 6 percent since the U.S. vote, corporate bonds have fallen 3.5 percent and emerging market dollar and local currency debt have slid 4.2 and 6.5 percent respectively.

But for the year overall the story looks different. Emerging market dollar and local debt have both earned investors around 9 percent and high-yield bonds have returned over 14 percent.

Analysts at Goldman Sachs say it is the best year since 2009 and has only been bettered 5 times in the past 30 years.

The clear winners though have been commodities and most things linked to them.

Thanks to the stellar gains for metals, Europe’s mining firms have soared 60 percent with big names like Anglo American and Glencore up 280 and 200 percent respectively.

Gold is up almost 7 percent despite being one of the assets hit hardest since the U.S. election. In agriculture robusta coffee has jumped over 40 percent and sugar is up over 20 percent.

At the other end of the table has been one of last year’s star performers, Chinese A shares. Tighter regulations and jitters about the China economy and the yuan have driven an 18 percent slump in the stocks in dollar terms.

And if you thought it has been a bad year for Britain’s pound, it’s been small change compared to Egypt’s pound which is down 60 percent having continued to slide after a 33 percent devaluation in November.

Editing by Jeremy Gaunt

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