For 2018, continuing strong economic and earnings growth and still easy monetary policy should keep overall investment returns favourable but stirring US inflation, the drip feed of Fed rate hikes and a possible increase in political risk are likely to constrain returns and increase volatility after the relative calm of 2017.

Apart from the likelihood of more volatility through the year, global shares are likely to trend higher through 2018 and we favour Europe (which remains very cheap) and Japan over the US, which is likely to be constrained by tighter monetary policy and eventually a rising US dollar. We also favour global banks and industrials over technology-related stocks that have had a huge run. Emerging markets are likely to underperform if the US$ rises as we expect.

Australian shares are likely to do okay but with returns constrained to around 8% with moderate earnings growth. Expect the S&P/ASX 200 index to reach 6,300 by end 2018.

Please click here to read the most recent Market Update and 2018 Outlook provided by AMP Capital.