European shares rallied, Asian stocks were mixed and US equity futures slipped as traders struggled to make sense of wild price swings that saw the Dow Jones Industrial Index rally more than 800 points in two hours on Thursday. The yen led gains against the dollar and gold climbed as traders looked for havens from the remarkable bout of volatility.
Miners and technology companies led gains in the Stoxx Europe 600 Index, yet futures on the Dow and Nasdaq pointed lower following roller-coaster trading in the previous session that saw the S&P 500 erase a drop of almost 3 per cent in an afternoon recovery Thursday -- the biggest upward reversal since 2010. In Asia, Japanese shares declined, while stocks in China saw modest gains. Yields on 10-year Treasuries held under 2.8 per cent and their Japanese counterparts dipped below zero. Oil bounced with commodities.
Following twists and turns in US equities in the last two trading sessions, even some longer-term bulls point to the value in bulking up on safer investments. Plenty of event risks loom in the coming quarter, from the UK vote on the Brexit deal to US-China trade talks to the continuing showdown between President Donald Trump and Congress over the budget.
“We’re heading into a period of higher volatility,” said Manpreet Gill, head of fixed income, currency and commodities strategy at Standard Chartered in Singapore. “You need to have some dry powder on the side to take advantage of that. That’s where we particularly think that cash plays a bit of a role.”
Japan and China had their final trading day of the year Friday. Aside from any further developments on the American political front -- where departures of senior officials and tensions at the White House over the Federal Reserve have unsettled investors, upcoming manufacturing PMIs from China and the US may be a focus in the coming week.
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Here’s a look at how some key assets have done this year:
- The S&P 500 is down 6.9%
- Japan's Topix is down 18%
- The Stoxx Europe 600 is down more than 14%
- The MSCI Emerging Markets Index dropped 17%
- Ten-year Treasury yields rose 36 basis points, to 2.77%
- The Bloomberg Dollar Spot Index rose 3.4%
- The Bloomberg Commodity Index fell 11%
Here are some events investors may focus on in coming days:
- Baker Hughes releases its weekly data on active U.S. oil rigs on Friday.
- China releases its official PMIs on Monday, the last day of 2018.
- Brazil's new president is sworn in on Tuesday.
- The U.S. ISM manufacturing PMI is due Friday, Jan. 4.
And these are the main moves in markets:
Stocks
- Futures on the S&P 500 Index decreased 0.3 per cent as of 8:04 a.m. London time.
- The Stoxx Europe 600 Index gained 0.7 per cent, the first advance in a week and the biggest rise in more than two weeks.
- The MSCI All-Country World Index increased 0.3 per cent to the highest in more than a week.
- The MSCI Emerging Market Index increased 0.8 per cent to the highest in more than a week.
Currencies
- The Bloomberg Dollar Spot Index dipped 0.2 per cent to the lowest in more than seven weeks.
- The euro gained 0.3 per cent to $1.1463, the strongest in more than two months.
- The Japanese yen jumped 0.6 per cent to 110.38 per dollar.
- The British pound climbed 0.1 per cent to $1.2656.
- The MSCI Emerging Markets Currency Index increased 0.4 per cent to the highest in more than three weeks on the largest climb in more than two weeks.
Bonds
- The yield on 10-year Treasuries climbed less than one basis point to 2.77 per cent.
- Germany's 10-year yield gained one basis point to 0.24 per cent, the largest gain in a week.
- Britain's 10-year yield gained four basis points to 1.303 per cent, the highest in a week on the biggest gain in a week.
- The spread of Italy's 10-year bonds over Germany's rose two basis points to 2.5363 percentage points.
Commodities
- The Bloomberg Commodity Index climbed 0.4 per cent.
- West Texas Intermediate crude advanced 2.6 per cent to $45.76 a barrel.
- LME copper increased 0.4 per cent to $6,008.00 per metric ton, the highest in more than a week.
- Gold gained 0.5 per cent to $1,281.98 an ounce, the highest in more than six months.
