Led by the US market’s roller coaster ride, equity trading during Christmas week has not been for the faint-hearted — or anyone hoping that markets could still somehow eke out gains for 2018.
“The final trading week of 2018 has been explosively volatile and wildly unpredictable,” said analyst Lukman Otunuga at FXTM.
“Global sentiment repeatedly swung from extremely bearish to bullish this week as investors tussled with concerns over slowing global growth, US-China trade developments, Brexit-related uncertainty and a partial US government shutdown.”
Frankfurt ended its final, shortened session of the year with a 1.7% gain, which eased some of the pain from a whopping annual loss, but even so, the Dax index still down by 18.3% for the year 2018.
Other European stocks also closed higher, building on the previous day’s late surge on Wall Street after a New York session that analysts at Accendo described as “another stonking stateside see-saw”. Markets were behaving like they wanted to compress a year’s worth of excitement into the space of just a few days, they said, making for “a surprisingly volatile end to the trading year”. At the opening yesterday, Wall Street at first built on the previous session’s late gains as bargain hunters swooped in.
But then sentiment soured again, and the Dow Jones index posted losses in late morning, only to return back to the previous day’s closing levels.
“This rollercoaster ride is unlikely to stop anytime soon as investors continue to wear emotions on their sleeve,” said Oanda analyst Stephen Innes.
Asian indices moved with caution yesterday after days of volatility on global markets failed to boost confidence.
But Tokyo’s benchmark Nikkei index ended the year with its first annual loss since 2011, trading in negative territory throughout the day.
“It’s inevitable that selling emerges after sharp rises like yesterday’s,” said Makoto Sengoku, market analyst at Tokai Tokyo Research Centre.
Over the year, Tokyo’s bellwether index has lost more than 10%. In commodities action, oil prices were mixed at the end of a topsy-turvy week.
Star performer gold held close to its highest level for more than six months, as investors sought out the safe-haven investment.
The precious metal had spiked on Thursday as high as $1,284.75 an ounce.
“It is shaping up to be an incredibly positive trading week for gold prices thanks to heightened geopolitical risks and dollar weakness,” added Otunuga.
Meanwhile Sao Paolo was the place to look for a glimmer of hope for shares: Brazil’s main stock market closed its final session for the year 2% higher, resulting in a gain of 11% for all of 2018.
“It’s quite a positive performance for Brazil,” said Andre Perfeito at the Spinelli consultancy. “An isolated case in an international context where most stock exchanges are suffering losses.”
In London, the FTSE 100 closed up 2.3% to 6,733.97 points; Frankfurt — DAX 30 ended up 1.7% to 10,558.96 points and Paris — CAC 40 closed up 1.7% to 4,678.74 points yesterday.