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European stocks slipped along with US index futures on the last trading day of the year. Treasury yields and the dollar were steady.
With most European markets closed or shutting down early on Friday, trading was thin as investors drew a line under a strong year for global equities as economies recovered from the pandemic. Emerging markets and Asian benchmarks lagged, partly due to China’s regulatory pressures and slowing economy. Bond investors are nursing losses as many central banks move towards tighter monetary settings to fight inflation. How the coronavirus and those policy shifts shape economic reopening are key for the outlook.
“As we look forward to 2022 the gains are probably going to be more modest than they’ve been in the past year or so” partly given where valuations are now, Jason Pride, chief investment officer for private wealth at Glenmede, said on Bloomberg Television. But there’s reason for optimism too since “we’re still in the recovery from the pandemic,” he said.
The Stoxx Europe 600 index hovered close to a record close after advancing more than 22% this year. Among major markets, only the UK and France were open for trading and both are closing early. Contracts on the S&P 500 and Nasdaq 100 were little changed. The S&P 500 pulled back from a record high on Thursday but is 27% up for the year.
Asian stocks got a fillip from a rally in a Hong Kong technology gauge following a surge in US-listed Chinese shares. The Hang Seng Tech Index rose 3.6%, while Chinese shares overall advanced. Those moves came in the wake of the Nasdaq Golden Dragon China Index’s biggest one-day jump on Thursday since 2008, though it’s still down more than 40% for 2021.
The latest data showed China’s manufacturing sector continued to expand in December, providing some relief to Beijing as the world’s second-largest economy continues to struggle with a property market slump. Less positively, Hong Kong may be facing an omicron virus-strain cluster.
The city’s stock market shut early and Japan is among those closed ahead of the New Year. Treasury futures were steady after yields fell in US hours. There is no cash Treasuries trading in Asia due to the holiday in Japan. The dollar fluctuated, oil declined and gold pushed higher. Bitcoin held December losses.
Traders are continuing to monitor China’s struggling property developers. A Chinese state-owned enterprise will take a 29% stake in China South City Holdings , in the latest sign of the authorities stepping up support for ailing real-estate firms.
The spotlight was also on talks by telephone between US President Joe Biden and Russian President Vladimir Putin. The Kremlin said Putin was satisfied with the outcome of the discussions. The US and its allies have raised alarm over a potential Russian invasion of Ukraine.
Some of the main moves in markets:
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.