Global Markets Wrap Up Christmas Week with Mixed Performance
As the year comes to a close, global markets are experiencing a mixed bag of performances. Despite a strong start to the week, Wall Street’s main indexes opened lower on Friday, with the Dow Jones Industrial Average down 0.56% and the S&P 500 falling 0.65%. The Nasdaq Composite also took a hit, dropping 0.79% in early trade.
Dollar Strengthens, Yen Weakens
The U.S. dollar is on track to end the year with a nearly 7% annual gain, while Japan’s yen is set for its fourth consecutive year of losses. This is largely due to traders’ expectations of robust U.S. growth, tax cuts, and deregulation under the incoming administration of President-elect Donald Trump. The dollar index, which measures the currency against six other major currencies, eased 0.09% on Friday but is still looking at a small weekly gain.
Treasury Yields Hover Near Highs
The benchmark 10-year Treasury yield was up slightly on Friday, hovering below a near-eight-month high reached on Thursday. Shorter-term Treasury yields, on the other hand, eased. The 10-year Treasury yield is currently at 4.595%, while the two-year Treasury yield is trading around 4.32%.
Global Stocks Experience Minor Retracements
MSCI’s broad global share index was 0.32% lower on Friday, but still up 1.07% for the week. MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.12%, marking a 1.5% weekly rise. Europe’s Stoxx 600 was 0.27% firmer on Friday and 0.7% higher for the week.
Central Banks Cautious on Rate Cuts
Federal Reserve Chair Jerome Powell has expressed caution about further rate cuts, citing concerns over U.S. tariffs hitting global trade. The Bank of Japan has also held back from a rate hike this month, preferring to wait for clarity on Trump’s policies. Meanwhile, traders anticipate the European Central Bank will deliver further rate cuts.
Gold and Oil Prices Rise
Gold prices dipped 0.84% to $2,612.20 per ounce, but are still set for a 27% rise for the year. Oil prices were also set for a weekly rise, with Brent crude futures rising 1% on the day to $73.99 a barrel.
Analysts Weigh In
According to Pictet Asset Management chief strategist Luca Paolini, “There is some potential upside left for this bull market, but it is limited.” Paolini believes that Trump’s inauguration day could be a potential inflection point, and that all the prospective good news will be priced in by then.
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