Global stocks bring record-breaking year to a close

Stocks in Europe close slightly lower while gold secures best yearly performance in a decade

                                

Stocks eased downwards on the final trading day of the year, but still remained within spitting distance of their recent highs, while gold secured its biggest yearly gain in nearly a decade and the dollar teetered at six-month lows.

Global stocks have had a record-breaking year in 2019, with many key indices hitting all-time highs, helped by low interest rates and the resilience of the corporate world in the face of a slowing economy and heightened political uncertainty.

The pound profited from the drop in the dollar, hitting two-week highs. News that the British government will raise the national minimum wage by nearly four times the rate of inflation next year did little to dent sterling’s rally.

The dollar took a knock after White House trade adviser Peter Navarro told Fox News a “phase one” trade deal with China was “in the bag”. This emboldened some investors to take profit on the US currency, which looked set to end 2019 with just a 0.4 per cent gain.

Marc Chandler, head of global currency strategy at Brown Brothers Harriman, said: “What had been a strong year for the dollar turned into a mixed one. The dollar fell against half of the 10 major currencies [Canadian dollar, British pound, Swiss franc, Japanese yen, and New Zealand dollar].”

With the pound gaining strength, UK shares edged lower. The FTSE 100 closed 0.6 per cent lower at 7,542.44 points, down 44, but the index has gained almost 13 per cent in the year. In France, the CAC 40 ended the session flat at 5,980 points, a 28 per cent gain for the year.

S&P e-mini and Nasdaq futures were pointing to a muted start on Wall Street later in the day. Both indices have hit record highs this year, thanks to accommodative monetary policy from the Federal Reserve, generous corporate buybacks and upbeat earnings.

A degree of caution still prevails over the trade deal between the US and China, and this may weigh a little on the financial world, according to some market watchers.

Joel Rubin, from Washington Strategy Group, told CNBC in an interview late on Monday: “That’s the real fear here. That this is more like a pause, a politically timed pause than an actual hard trade deal that opens up market access, protects American intellectual property rights and really gets this relationship back on solid ground.”

The pound was up 0.7 per cent against the dollar at $1.3199, and by 0.3 per cent against the euro at 85.08 pence. The euro rose 0.3 per cent against the dollar to $1.1231, but was flat against the Japanese yen at 121.90 yen.

Gold rose for a third day, reaching its highest since late September and securing a 20-per cent gain this year, making 2019 its strongest in terms of price performance since 2010.

The dollar's weakness in the final weeks of this year has given gold an extra push to vault above $1,500. The prospect of no immediate interest rate rises from the Fed has undermined the dollar’s muscle and “yield appeal” compared with other currencies.

Spot gold was last up 0.5 per cent at $1,522 an ounce, which helped to lift the rest of the precious metals complex. Silver rose 0.7 per cent to $18.02 an ounce, platinum rose 1.3 per cent to $969.30 an ounce and industrial metal palladium gained 0.9 per cent to trade around $1,926 an ounce.

The oil price slid by more than 2 per cent on the day to about $66.67 a barrel, but this did little to dent crude’s overall performance in 2019. Oil has gained more than 30 per cent this year, its strongest annual performance since 2016, when it rose by nearly 74 per cent.

Production cuts by some of the world’s biggest exporters, coupled with geopolitical tensions in the Middle East have helped offset weakness in demand stemming from a slower global economic backdrop and extra supply from the US shale oil basin.

Cryptocurrencies encountered a flurry of year-end selling, as investors cashed in on the likes of Bitcoin’s doubling in value this year, or Litecoin’s 40 per cent rise. Bitcoin was last down 1.3 per cent at $7,243.20, while Litecoin was down 2 per cent at $42. Ethereum, something of an outlier in 2019 with a 14-per cent drop, was last down 1.6 per cent at $131.50.

FURTHER READING: Global stocks bring a record-breaking year to a close

FURTHER READING: JP Morgan upgrades 2020 oil price outlook

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