How should investors navigate the postelection market and new economic landscape in 2017?

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Nov 29, 2016, 09:00 ET

RBC Wealth Management-U.S. Global Outlook report explores opportunities in U.S. equities, the global rate and credit outlook and the future of the oil market

MINNEAPOLIS, MN, Nov. 29, 2016 /PRNewswire/ - As investors look ahead to 2017 and try to determine the best opportunities for growth in their portfolios, there are many considerations to take into account in the postelection era.

RBC Wealth Management's Global Insight 2017 Outlook showcases the firm's analysts' unique perspectives and highlights compelling opportunities for investors in the year ahead. The report provides insights into U.S. equities, fixed income, oil, European equities and Canadian equities.

Highlights include:

U.S. Equities

Although President – elect Trump's agenda could supersize GDP growth, bread-and-butter fundamentals, such as consumer spending, wage growth, employment growth and standard drivers of the market, should play pivotal roles as well.
We believe the market has the potential to deliver low double-digit total returns in 2017, an above-average rate. We have raised our rating on U.S. equities.
Biotech and pharma, banks, infrastructure, and Energy are the bellwethers for 2017—if they perform well, the market as a whole should deliver.

"The dramatic leadership change in Washington will help shape U.S. equity market returns and sector leadership in early 2017 and possibly at other points throughout the year," said Janet Engels, Director of RBC Wealth Management's Portfolio Advisory Group. "Investors need to consider that benefits from Trump's fiscal stimulus also come with new risks and the potential for heightened market volatility."

Fixed Income

Major central banks will continue to nurture fragile economies to achieve sustainable, long-term growth.
RBC analysts continue to favor opportunities in corporate credit, but in the face of tighter spreads in this part of the market, remain selective and expect to become increasingly defensive by limiting duration exposure.

"The message for investors is that the Fed remains accommodative, even in the midst of a policy of gradually raising rates," said Craig Bishop, Lead Strategist, U.S. Fixed Income Strategies at RBC Wealth Management. "This progression to higher interest rates and steeper yield curves should continue into early 2017 as markets adjust to gradually tighter Fed policy and a semblance of stability in global markets."

Oil

RBC analysts believe that oil will continue to play an important role in the overall market landscape.
Supply-demand rebalancing and potential OPEC policy improvements are reasons for optimism. However uncertainties remain regarding political unrest in some producer nations, the direction of U.S. foreign policy, and substantial slack in domestic shale production.

European Equities

A heavy slate of elections scheduled across Europe in 2017 leads RBC analysts to believe investors should be braced for elevated political risks over the next 12 months.
Investors need to be prepared for heightened volatility in European and U.K. equity markets and the implications of foreign exchange exposure.

Canadian Equities

The Canadian stock market has outpaced global equity indexes in 2016.
A recovery in valuations has raised the bar for continued outperformance in 2017, but RBC analysts believe conditions are in place that will deliver attractive relative returns in the Canadian market's largest sectors—Financials and Energy—which should allow for another year of solid equity returns.

About RBC Wealth Management-U.S.
In the United States, RBC Wealth Management operates as a division of RBC Capital Markets, LLC. Founded in 1909, RBC Capital Markets, LLC. is a member of the New York Stock Exchange, the Financial Industry Regulatory Authority, the Securities Investor Protection Corporation, and other major securities exchanges. RBC Wealth Management has $284 billion in total client assets with 1,800 financial advisors operating in 200 locations in 41 states. For more information about RBC Wealth Management-U.S., visit http://www.rbcwealthmanagement.com/.

This material is for informational purposes only and does not constitute investment or tax advice. Past performance is not indicative of future results.

SOURCE RBC Wealth Management - U.S.