The ailing dollar fell to its lowest in over three months yesterday, while surprisingly upbeat Chinese manufacturing data ensured there was no serious new year hangover for world shares despite a groggy start for Europe.
Wall Street was expected to get 2018 off the mark with a small gain, with sentiment also helped by news that North Korea had offered an olive branch to South Korea.
MSCI’s broadest index of world shares climbed 0.2 per cent, having set scores of record highs and risen by one-fifth in value last year.
The driver overnight had again been Asia and its emerging markets.
Euro enjoying its strongest year against the dollar in 14 years
In currency markets, the dollar remained out of favour having already hit a three-month low against a basket of its peers on Friday. That brought its losses for 2017 to 9.8 per cent, its worse performance since 2003.
Its pain was the euro’s gain though, with the single currency enjoying its strongest year against the dollar in 14 years.
Yesterday, it jetted to a near-four-month top of $1.2081 as data showed that euro zone manufacturers ramped up activity last month at the fastest pace in more than two decades.
It had already sliced through major resistance on the yen in Asia, reaching highs not seen since late 2015 at 135.45 yen. The rally against dollar, meanwhile, meant euro bulls were now eyeing the September peak of $1.2092, a break of which would take the currency to ground last trodden in late 2014.
The pound, Swiss franc and Scandinavian currencies were also up solidly against the struggling dollar.
That combined with a two-month high in bond yields in Germany and Italy, two of the euro zone’s biggest debt markets, pushed stock markets in London, Frankfurt and Paris 0.4 to 0.7 per cent into the red.
Carmaker stocks caused the biggest dent, skidding 1.4 per cent on weaker new car registrations data from France and forecasts that those in Britain would see as much as a five per cent drop later in the week.
Copper dipped back a little yesterday to $7,235.50 a tonne, but that follows a rise of 31 per cent in 2017 to a four-year top.
Aluminium amassed gains of 34 per cent.
Gold was 0.7 per cent firmer at $1,311 an ounce, after advancing by 13 per cent in 2017 for its best performance in seven years.
Brent crude oil futures ended the year with a 17 per cent rise, while US crude climbed 12 per cent on strong demand and declining global inventories.
Yesterday, Brent added another few cents at $66.92 a barrel, while United States crude firmed seven cents to $60.48.