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Dec 31, 2018

Asia, Europe and US Markets at Close Report


Hong Kong and Australia close out 2018 with annual declines

Eustance Huang

Stocks in Asia were mixed on the final day of 2018, as most major markets around the globe were set to record calendar year declines.
Hong Kong’s Hang Seng index rose 1.34 percent to finish the trading year at 25,845.70. The day’s gains, however, were unable to offset the index’s performance for 2018 — with it declining about 13.61 percent as compared to its final close of 2017. Hong Kong’s markets closed at 12:00 p.m. HK/SIN today for New Year’s Eve.
The ASX 200 in Australia, meanwhile, slipped 0.14 percent to close out 2018 at 5,646.40. The benchmark Australian index ended 2018 lower by 6.9 percent as compared to its final close of 2017. Australia’s markets closed at 11:10 a.m. HK/SIN today for New Year’s Eve.
On Monday, the materials subindex Down Under gained 0.4 percent, as shares of major miners advanced. Rio Tinto rose 0.50 percent, Fortescue advanced 1.21 percent and BHP Billiton climbed up by 0.82 percent.
Markets in Japan, South Korea and mainland China were closed.

Asia-Pacific Market Indexes Chart

NIKKEINikkei 225 IndexNIKKEI20014.77-62.85-0.31
HSIHang Seng IndexHSI25845.70341.501.34
ASX 200S&P/ASX 200ASX 2005646.40-7.90-0.14
KOSPIKOSPI IndexKOSPI2041.0412.600.62
CNBC 100CNBC 100 ASIA IDXCNBC 1007312.8241.140.57
China manufacturing activity decelerates
China’s manufacturing activity in December contracted even more than expected, according to government data: The country’s official manufacturing Purchasing Managers’ Index (PMI) came in at 49.4 — lower than the 49.9 analysts expected in a Reuters poll.
That was worse than November’s official manufacturing PMI, which was 50.0. A reading above 50 indicates expansion, while a reading below that signals contraction.
Official non-manufacturing PMI came in at 53.8 — higher than the reading of 53.4 in November. Economic data from China is being closely watched amid the ongoing trade war between Washington and Beijing.
In trade war news, U.S. President Donald Trump took to Twitter on Saturday and said that a “long and very good call ” had taken place between himself and Chinese President Xi Jinping.
In the post, Trump also said: “Deal is moving along very well. If made, it will be very comprehensive, covering all subjects, areas and points of dispute. Big progress being made!”
Following the tweet, however, the Wall Street Journal reported that Trump “may be overstating how close the two sides are to an agreement, ” citing sources “familiar with the state of negotiations.”
Trump’s comments came after both he and Xi earlier this month agreed to a 90-day pause in tariff escalation.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 96.452 after seeing highs above the 97 handle last week.
The Japanese yen, widely viewed as a safe-haven currency, traded at 110.41 after touching lows above 111.3 in the previous trading week. The Australian dollar was at $0.7061 after seeing highs above $0.707 last week.
— Reuters and CNBC’s Huileng Tan contributed to this report.


European stocks end 2018 with deep losses; worst year in a decade amid geopolitical uncertainties

Spriha Srivastava

European stocks closed higher on the final day of 2018 but marked the year as its worst in a decade.

European Markets: FTSE, GDAXI, FCHI, IBEX

FTSEFTSE 100FTSE6728.13-5.84-0.09232272148
The pan-European Stoxx 600 closed 0.38 percent higher. The FTSE 100 closed trading on the final day of the year, down 0.2 percent. The French CAC, meanwhile, closed more than 1 percent higher.
The German DAX is closed on Monday.
U.K.’s FTSE index is down more than 12 percent since the start of the year and has suffered its biggest one-year fall since the financial crisis in 2008 as investors digest uncertainty surrounding the country’s exit from the European Union.
The pan-European Stoxx 600 has ended the year down 13 percent - its worst since the financial crisis. The DAX, has followed a similar trajectory, down more than 18 percent since the start of the year.
Market focus is largely attuned to the progress on the U.S.-China trade standoff after hints emerged when President Donald Trump said he had a “very good call” with Chinese President Xi Jinping on Saturday to discuss trade. He also claimed that “big progress” was being made on this front. His statements have brought optimism to stocks worldwide that have been under pressure this year.
Following the tweet, however, the Wall Street Journal reported that Trump “may be overstating how close the two sides are to an agreement,” citing sources “familiar with the state of negotiations.”
Trump’s comments came after both he and Xi earlier this month agreed to a 90-day pause in tariff escalation.
However, market sentiment remained on edge after survey data out of China on Monday suggested that China’s manufacturing activity in December contracted even more than expected.
Back in Europe, the deadlock around Brexit continues to concern investors. On Sunday, U.K. Trade Minister Liam Fox said there is a “50-50” chance that Brexit may be stopped if Parliament rejects the government’s divorce deal with the European Union next month.
The U.K. Parliament is set to vote on the Brexit deal in the week starting January 14.


US stocks post worst year in a decade as the S&P 500 falls more than 6% in 2018

Fred Imbert

Wall Street concluded a tumultuous 2018 on Monday as the major stock indexes posted their worst yearly performances since the financial crisis.
After solid gains on Monday, the S&P 500 and Dow Jones Industrial Average were down 6.2 percent and 5.6 percent, respectively, for 2018. Both indexes logged in their biggest annual losses since 2008, when they plunged 38.5 percent and 33.8 percent, respectively. The Nasdaq lost 3.9 percent in 2018, its worst year in a decade, when it dropped 40 percent.
The S&P 500 and Dow fell for the first time in three years, while the Nasdaq snapped a six-year winning streak. 2018 was a year fraught with volatility, characterized by record highs and sharp reversals. This year also marks the first time ever the S&P 500 posts a decline after rising in the first three quarters.

For the quarter, the S&P 500 and Nasdaq plunged 13.97 percent and 17.5 percent, respectively, their worst quarterly performances since the fourth quarter of 2008. The Dow notched its worst period since the first quarter of 2009.
A sizable chunk of this quarter's losses came during a violent December. The indexes all dropped at least 8.7 percent for the month. The Dow and S&P 500 also recorded their worst December performance since 1931 and their biggest monthly loss since February 2009.
Investors dumped stocks this month amid concerns of an economic slowdown and fears the Federal Reserve might be making a monetary policy mistake. Concern over ongoing trade negotiations between China and the U.S. have also pressured stocks this month.

But that doesn't explain just how wild a ride December was for investors. At its low price on Christmas Eve, the S&P 500 was down more than 20 percent from its record high on an intraday basis, briefly meeting the requirement for a bear market. The stock market would come soaring back in the next session, with the Dow jumping more than 1,000 points on Dec. 26, its biggest ever point gain.
Traders had trouble pinpointing the cause of the extreme volatility, with some chalking it up to computers.
The major averages trimmed some of their sharp annual losses on Monday on hopes of trade progress between China and the U.S. The Dow climbed 265 points, while the S&P 500 and Nasdaq both gained 0.8 percent.
John Stoltzfus, chief investment strategist at Oppenheimer Asset Management, said these declines are "setting the stage for upward surprises in 2019."
"With what we believe to be almost all but the kitchen sink priced into current valuations, we see opportunity for multiples to return to levels seen at the end of the third quarter … with multiple expansions resulting in a global equity rebound in the coming year," Stoltzfus wrote in a note.
"That said, we do not expect a rally of great significance to emerge until sometime into the first quarter of 2019. We look for market risk to weigh on investor sentiment into the new year until catalysts for a rally of some material significance appear on the scene," he added.
Merck shares rose more than 1 percent, ending the year as the best-performing Dow component of 2018. Pfizer, the second best performer on the Dow this year, also climbed 1.6 percent on Monday.  Netflix jumped 4.5 percent while Amazon rose 1 percent after the popular FAANG trade (Facebook, Amazon, Apple, Netflix and Alphabet) took a beating recently.
President Donald Trump said this weekend he had a "very good call" with Chinese President Xi Jinping to discuss trade. The president also claimed that "big progress" was being made on this front. Trump's statements sparked gains in markets worldwide.
However, The Wall Street Journal reported that Trump may be overstating how much progress was being made. The report cited people familiar with the situation. China and the U.S. agreed earlier this month to a 90-day grace period to try and work out their differences on trade.
"The threat of an escalating trade war has chilled US business confidence, with managers uncertain as to if/how they should restructure global supply chains," Nicholas Colas, co-founder of DataTrek Research, wrote in a note to clients.
"The most bullish case here is that the tariff issue will be settled in Q1 2019, and a meaningful resolution should be enough to trigger a first half rally for stocks," Colas added. "Against that optimistic take are two bearish outcomes: one, that these negotiations take longer and two, that they fail outright."

Source: CNBC

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