Political shocks dominated market moves in 2016.
AMP Capital chief economist Shane Oliver says Britain's surprise decision to exit the European Union has unsettled investors.
"I think the same will apply in the run-up to elections in the Netherlands in March, the French election through April and May, and the German election later in the year. At the end of the day, though, I think centrist parties in Europe will remain in power. So I think this Eurozone break-up risk will remain a feature as we go through 2017, but I think, at the end of the day, Europe will hold together."
With the European Union holding on tenuously for now, relations between the world's two biggest economies will be in focus.
China's economy performed better than expected in 2016 but, while a slowdown in its property market is its biggest concern domestically, there are wider concerns.
Australian Institute of Company Directors chief economist Stephen Walters says international tensions may come to the fore.
"There may be some issues around trade. Obviously, if the US does impose tariffs on its products imported into the US, then China may be forced to respond. I really hope that doesn't happen, because that's a very negative outcome. But I think China will be an economic force next year, and I think it's on the positive side, particularly for Australia."
Shane Oliver, with AMP Capital, says he expects some sort of US action on China.
"I don't think we'll get a full-on trade war with the US, but, obviously, Donald Trump was elected on a mandate to bring back jobs to the US, to get a better deal for the US on the trade front, particularly with China. And I think he'll want to do something on that front."
Stephen Walters says, in his election campaign, Donald Trump also promised to improve the United States' domestic position.
"You've got a big new wave of infrastructure spending and tax breaks going into an economy that is already operating at its capacity, so I think the clear implication is that you are going to get some inflation in that economy."
That means further US interest rate rises.
Earlier this month, the Federal Reserve lifted US interest rates for only the second time since the global financial crisis.
Mr Walters says that has led to a repricing of international interest-rate-related products, which influence part of the funding mix for Australia's banks.
"It actually could get quite painful for mortgage rates next year. If Donald Trump says he is going to refloat that economy and actually does it, then I think the implications for Australians will be higher interest rates, with perhaps the beneficial offset being the lower Australian dollar."
Shane Oliver says that, in turn, may prompt a Reserve Bank cut as Australia's economy slows.
"We're still running well below potential. We've still got 14 per cent of the labour market who are either unemployed or underemployed, so there's a lot of spare capacity there. That's going to mean downward pressure on wages continues, which means very low inflation and economic growth will still be sub-par in Australia, all of which means the Reserve Bank will cut interest rates in Australia again some time in the first half of the year."
He says, ultimately, investors will probably follow the lead of a growing US economy.
"Yes, global interest rates, global bond yields, might be edging up, but, by the same token, that's likely to be backed up by stronger profit growth than we've seen over the course of the last year. So my feeling is that we'll see global equities and, indeed, Australian equities returning something like 8 to 10 per cent over the course of the next 12 months."
