Global stocks close near record highs ahead of New Year, dollar and oil dip
Equities around the globe traded little changed on Thursday as oil prices fell and the U.S. dollar dipped against most major currencies although it has had its best year since 2015 with a 6.7% rise .
With several markets in Asia and Europe closed on Friday, trading volumes were thin and most markets directionless.
The MSCI World Index (.MIWD00000PUS) shed 0.07%. The index has surged 17% in 2021, its third consecutive year of double-digit gains.
Analysts say the U.S. economy has proven resilient in the face of pandemic-related challenges, and many expect the global economy will still expand at a well-above-trend pace.
After initially tumbling in December, world stocks recovered over the holiday period as investors became reassured economies could handle the surge in Omicron coronavirus cases, and are heading back toward record highs.
“As far as COVID is concerned, for now, market participants may stay willing to add to their risk exposures, and perhaps push equity indices to new highs, as several nations around the globe held off from imposing fresh lockdowns, despite record infections around the globe the last few days,” said Charalambos Pissouros, head of research at Cyprus-based brokerage JFD Group.
The dollar index fell 0.418% on Friday.
On Wall Street, New Year’s Eve trading ended near record highs on Friday.
All three major U.S. stock indexes scored monthly, quarterly and annual gains, notching their biggest three-year advance since 1999.
Investors have held onto expectations for resilience in the global recovery into 2022 and the prospect of further gains if money remains cheap and corporate profitability high.
This year’s “everything rally” has seen a wall of cheap central bank cash, government stimulus and strong economic rebounds out of the pandemic make it hard not to profit from soaring asset prices.
U.S. stocks have powered the global rally as record-breaking earnings figures from Big Tech companies excited investors. This week the S&P 500 hit another record high.
Commodity prices have enjoyed a strong year too, with supply often falling short of a jump in demand as economies reopened.
On the last day of the year however, Brent crude futures settled down $1.75, or 2.2%, at $77.78 a barrel while U.S. West Texas Intermediate (WTI) crude futures dropped $1.78, or 2.31%, to $75.21 a barrel.
But both Brent and WTI are up more than 50% in 2021, spurred by the global economic recovery and producer restraint.
Global oil prices are expected to rise further next year as jet fuel demand catches up.