While there were risks and uncertainties that persisted throughout the year, such as the worry over the possibility of a hard economic landing in China; the anxiety over the direction of oil prices, and commodity prices in general; and the market meandering due to the uncertainty in the timing, pace, and magnitude of the US Fed’s policy rate normalization, there were specific events that shocked the market.
These include the unexpected outcome of the Brexit referendum in June, and the upset in the close race in US Presidential election in November. Financial markets did not get both of these right. Trading positions betted on the other side of the table, so to speak, and underestimated the underlying political sentiment. The surprise resulted in episodes of elevated financial market volatility.