US stocks end 2018 as worst year since 1931 financial meltdown

A trader works on the floor of the New York Stock Exchange. stocks erased gains in thin trading on the final day of what is the worst year since the financial crisis. Bloomberg

US stocks ended the worst year since the financial crisis with a narrow gain in thin pre-holiday trading. Treasuries rose to a 10-month high.

The S&P 500 finished a choppy session higher and the Nasdaq Composite capped its first four-day advance since August amid optimism that President Donald Trump will move toward a trade deal with China. The advance trimmed the worst December rout for the S&P 500 since 1931 to 9.2 per cent. That monthly rout capped a 6.2 per cent slide in the year, the biggest of the record bull market.

Stocks around the world limped into the end of a dismal year that’s seen bear markets in equities from Japan to Germany. Europe’s main stock gauge fell 13 per cent drop in the year -- the biggest since 2008. The 10-year Treasury yield slid to 2.68 per cent, the lowest since February. The dollar edged lower as a government shutdown continued, while the yen climbed to a four-month high.

In commodities, crude slumped to its first annual loss since 2015, completing a reversal that saw it drop from a four-year high set just three months ago. Natural gas futures slid on Friday below $3 for the first time since September, giving the front-month contract its worst December since 1991. Gold barreled into 2019 near a six-month high on haven demand.

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While the glimmer of hope on the trade front sent global stocks out on a high note, plenty of event risks loom in the next 12 months, from the UK’s exit from the European Union to US-China trade talks and the continuing showdown between President Trump and Congress over the budget. The American political landscape is also unsettling investors following departures of senior officials and Trump’s repeated criticism of Federal Reserve Chairman Jerome Powell.

Investors will be keenly watching the US December jobs report is that is due on January 4, and Mr Powell comments who will be interviewed with predecessors Janet Yellen and Ben Bernanke at the annual meeting of the American Economic Association Friday. The S&P 500 Index rose 0.9 per cent. The Nasdaq Composite added 0.8 per cent. The Dow rose 265 points and the Russell 2000 gained 0.8 per cent.

The Stoxx Europe 600 Index rose 0.4 per cent to the highest in more than a week. The MSCI All-Country World Index gained 0.3 per cent to the highest in more than a week. The MSCI Emerging Market Index climbed 0.4 per cent to the highest in more than a week.

The Bloomberg Dollar Spot Index dipped 0.2 per cent to the lowest in almost 10 weeks. The euro added 0.1 per cent to $1.1455. The yield on 10-year Treasuries fell three basis points to 2.68 per cent.

The Bloomberg Commodity Index fell 1.1 per cent. West Texas Intermediate crude rose 8 cents to $45.41 a barrel. The US natural gas futures slid 9.8 per cent to $2.979. Gold futures rose 0.1 per cent to $1,284.30 an ounce.