Investors gravitated to safe-haven assets yesterday as worries about the world economy persisted, cutting short a two-day rebound in US stocks. US stocks see-sawed, making it difficult for world equity indexes to end one of the most brutal December selloffs in memory on a high note.
After fluctuating most of the morning, at midday the Dow Jones Industrial Average rose 43.89 points, or 0.19 per cent, to 23,182.71, the S&P 500 gained 6.85 points, or 0.28 per cent, to 2,495.68 and the Nasdaq Composite added 21.03 points, or 0.32 per cent, to 6,600.53.
The pan-European FTSEurofirst 300 index rose 1.85 per cent and MSCI’s gauge of stocks across the globe gained 0.58 per cent to bring the global benchmark to a weekly gain over 1 per cent.
Markets have swung wildly in a week shortened by the Christmas holiday. But even a late Santa Claus rally will do little to salve the 8 per cent declines for the MSCI index this month and a year that brought gains for very few categories of financial assets, from stocks to bonds and commodities.
The dollar index fell 0.1 per cent, with the euro up 0.1 per cent to $1.1441 and Japanese yen strengthening 0.57 per cent versus the greenback at 110.39 per dollar. The greenback is down about 0.9 per cent this month.
That has boosted gold, a traditional safe haven whose appeal this year was hit by a stronger dollar, which makes the metal more expensive to buyers with other currencies. The metal is perched at six-month highs of $1,279.18 an ounce.
The steady drum beat of disappointing economic data has continued to reinforce caution, with Japan’s industrial output contracting in November and retail sales showing sharply.
In Europe, German annual inflation slowed sharply in December, while in the United States, National Association of Realtors data showed contracts to buy previously owned homes fell unexpectedly in November, the latest sign of weakness in the US housing market.
Chris Bailey, a strategist at brokerage Raymond James, said dollar weakness was good news for non-US assets.
“My feeling is if we get the transmission mechanism of a lower dollar, stocks outside the US are set up for a good 2019,” Mr Bailey said.
“Once people get their heads around the fact the US is not going to have yet another double-digit return year in 2019, you can look elsewhere.”
That would be a relief to world markets that largely underperformed the United States in 2018.
Meanwhile, US crude oil futures managed to lift a bit further off two-year lows after a near-40 per cent decline this quarter.
The Energy Information Administration reported US crude stocks fell modestly last week.
Brent crude futures yesterday fell three cents to $52.13 a barrel, a 0.1 per cent loss.
US West Texas Intermediate (WTI) crude futures rose 54 cents to $45.15 a barrel, a 1.2 per cent gain.