Global stocks rallied on Friday, adding to a week of seesaws on Wall Street that captured the uncertainty gripping investors heading into 2019. The Stoxx 600 European benchmark was up 1.7%. France’s CAC 40 and the U.K.’s FTSE 100 gained 1.7%, too. In Asia, Hong Kong’s Hang Seng Index was up 0.1% and China’s Shanghai Composite gained 0.4%.
The holiday period has been defined by wild market swings, with U.S. stocks slumping Thursday before staging a dramatic comeback just before markets closed. The Dow Jones Industrial Average swung from an intraday 2.7% fall to close 1.1% higher.
In the U.S., futures pointed to a 0.5% opening gain Friday for the S&P 500 and the Dow. Technology and financial stocks led the European market higher, with German lender Commerzbank up 4.5% and Italy’s Banco BPM BAMI +4.65% up 4.7%, while Deutsche Bank , which has lost 56% over the past year, gained 3%.
Despite the rally late this week, analysts remain cautious about the prospects for equity markets into the new year. “Investors continue to be worried by the economic outlook,” said Charles St Arnaud, senior investment strategist at Lombard Odier Investment Managers. He also pointed to a string of news from Washington that has created uncertainty for investors, including President Trump’s complaints about the U.S. Federal Reserve, just as thin trading exaggerates market moves.
Concerns that the U.S. economy is set for a slowdown have weighed on markets in recent months, as the effects of President Trump’s tax reforms wear off and the U.S. central bank tightens monetary policy. Equity markets rallied earlier this year, led by the technology sector, but those gains have been reversed in the past quarter.
The S&P 500 benchmark is down almost 7% this year, while the Stoxx 600 is down more than 14%. There have been few havens for investors, with gold, international bonds and cash equivalents all offering paltry returns.
Top of mind in the U.S. this week is the partial government shutdown, which is expected to continue into January as the issue of funding a wall on the border with Mexico cleaves further open a partisan split in Congress.
“The U.S. economic data is not great and there is no reason to believe it will improve,” said Jan Dehn, head of research at Ashmore Group, an emerging-market investment manager. “I expect U.S. stocks to have a tough time in 2019 and this sudden bounce on low volume is a great opportunity to offload in case you missed it earlier,” he added.
Chinese stocks closed modestly higher, up 0.4%, on the country’s last trading day of the year, a mild consolation to the end of a dismal year marked by the U.S.-China trade spat and slowing economic growth. The benchmark Shanghai Composite Index recorded a 25% loss for the year, the biggest since 2008, when it plunged 65%.
The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was down 0.4%. The 10-year U.S. Treasury yield ticked up to 2.754%, from 2.744% on Thursday. Yields move inversely to prices. Brent crude oil was up 1.5% at $53.53 a barrel.
Categories: Stock Markets