Prepare for an eventful year - and surprises

AT the start of 2013, analysts were circumspect about the prospects for equity markets for the year. The US recession was still a fresh memory, Europe remained mired in its sovereign debt crisis and there were still people betting on the end of the euro. In Japan, Shinzo Abe had just been elected prime minister. And gold was still viewed as a good hedge against global uncertainty.

As often happens, reality turned out to be quite different from expectations - in this case, substantially brighter. The benchmark S&P 500 jumped almost 30 per cent, the most since 1997. Buoyed by the potential positive impact of "Abenomics", the Japanese market did even better, with the Nikkei soaring 58 per cent - its best performance since 1972. The US economy recovered faster than most expected, with unemployment falling to a five- year low of 7 per cent by year-end, consumer confidence buoyant and housing prices firming. Gold was a victim of the US recovery, crashing 28 p…