Looking back, will be remembered as a year that offered up plenty of twists and turns. When the UK voted to leave the European Union in June, it not only raised questions about the prospects for its own economy, but it also put the future of the EU into doubt. At RBC Wealth Management, we see a number of key themes on the horizon that are likely to shape both the global economy and financial markets in Politics will continue to be key in as Europe faces a heavy slate of elections in the coming year.

This leads us to believe investors should be braced for elevated political risks as European countries go to the polls. We believe investors need to be prepared for potentially higher volatility in equity markets and the implications of foreign exchange exposure. Our expectation is for a prolonged period of uncertainty that will likely take a toll on economic growth and could lead to bouts of heightened volatility.

In the UK, our preference is for companies in defensive sectors, such as consumer staples and pharmaceuticals, given the likelihood of a weaker pound and soft domestic demand. We are cautious on domestic sectors, such as retailers, which have historically suffered when the pound is weaker. In Europe, banks could benefit from low valuations and recent reports that the European Central Bank ECB may be pondering a change of direction, though recent weak lending data rein in our enthusiasm.

With subdued economic growth, fair valuations and high political risk, we prefer well-capitalised, quality companies that have world-class franchises and pay and grow dividends.

Prior to the election, the U. We favour the U.

The biggest concern about the U. Even so, this does not spell doom. Stronger economic growth combined with the end of disinflationary pressures and rising interest rates could push stock markets up higher still, causing valuations to rise to much more elevated levels.

For , we expect an extension of the bull market in the U. After five years of underperformance relative to its U. However, lower valuations and better-than-expected earnings helped the Canadian stock market outpace global equity indices in Despite solid stock market growth in , we believe that there is plenty of scope for continued performance in the coming year and that the conditions are in place to deliver attractive relative returns in energy and the financial sector.

For this to bear fruit, there needs to be a continued rise in oil prices. We believe that lower non-OPEC production, decent demand growth, and limited OPEC spare capacity should drive prices higher in Accommodative monetary policy is likely to remain in place in all the major economies in , although we see it taking very different forms in the U. Ultra-low interest rates will remain the order of the day in Canada; however, the Federal Reserve is expected to move further into a hiking cycle already characterised by patience and a very gradual pace.

The Bank of England BoE will have to weigh the risks of higher inflation, stemming from the steep decline in the pound, against the potential need for stimulus should Brexit-related developments unduly weaken confidence and economic output. Meanwhile, the ECB may have to adjust its approach to accommodation given practical limits to its current bond-buying program.

Overall, we believe global central bank policies will still best be described as accommodative. But will make clear that the look and feel of accommodation will be different in each region. In bond markets, central bank policy and political upheaval will have an influence. In the UK, we expect to see volatility in the gilt market as a response to any Brexit-related developments and any interest rate rises in the U. Finally, in Europe, we continue to have a preference for corporate bonds over government bonds.

You should carefully read any risk warnings or regulatory disclosures in this publication or in any other literature accompanying this publication or transmitted to you by Royal Bank of Canada, its affiliates or subsidiaries. All opinions and estimates contained in this report are judgements as of the date of this report, are subject to change without notice and are provided in good faith but without legal responsibility.

This report is not an offer to sell or a solicitation of an offer to buy any securities.

Investment Outlook - RBC Global Asset Management

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Quarterly Economic Update - RBC

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With divorce negotiations between the UK and EU just starting, what might it mean for executives working in Europe?

Basel III regulations will change the way banks treat cash held on deposit, causing a knock-on effect for investment managers trying to deal with cash in the low interest rate environment. RBC cees RBC Wealth Management. We've detected that you're in Europe , adjust your location here. How can we help?

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Following a year that offered up its fair share of challenges, we look ahead to the themes likely to drive markets in Let us match you with one. Your finances Life after Brexit: What investment managers and clients need to know Basel III regulations will change the way banks treat cash held on deposit, causing a knock-on effect for investment managers trying to deal with cash in the low interest rate environment. Business owners and wealth transfer Read the full report.

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