Analysis

The economic environment improved steadily throughout 2009.

The UK economy is likely to have shrunk nearly 5% in 2009 yet many UK firms have shown resilient profitability.

Japan's economic recovery has proved to be anaemic in 2009 and it is a great surprise the market has underperformed its Western counterparts and the Asian markets.

Axa Pan Euro High Yield leads way as average fund in peer group gains 5.5% over past year to 1 January

Last year was a stellar year for emerging equity markets.

We remain constructive on the outlook for the US equity market over the next year and continue to see upside potential for the S&P 500 Index to between 1250 and 1350 by the end of 2010.

While job losses have been milder than those seen in previous recessions, it might be tempting to think, despite an extraordinary recession, we are set to enjoy an ordinary recovery.

Corporate bonds posted a strong performance in 2009 (c. 15%), more than recovering the losses of 2008, and have dramatically outperformed equities over the last decade.

The European market has continued to rise, led by basic industries.

I think 2010 could surprise the sceptics, many of whom were wrong-footed by the 2009 rally.