Stock markets mostly rose Monday on the last day of a volatile year, after U.S. President Donald Trump said he expected to resolve trade friction with China after speaking with Chinese President Xi Jinping.
KEEPING SCORE: In Europe, the CAC 40 of France rose 1.1 percent to 4,730.69, ending the year down about 11 percent. Britain’s FTSE 100 closed down 0.1 percent at 6,728.13 for an annual loss of 12.5 percent. Germany’s DAX, which was closed Monday, has been one of the worst-performing European indexes. It ended in a bear market, down 22 percent from a high in January and 18 percent from the start of the year.
Hong Kong’s Hang Seng advanced 1.3 percent on Monday to 25,485.70, while India’s Sensex gained 0.2 percent to 36,129.27. Australia’s S&P ASX/200′s benchmark slipped 0.1 percent to 5,646.40. Most other markets were closed for the New Year holiday. The future contract for the Dow Jones industrial average gained 0.8 percent to 23,223 and that for the S&P 500 jumped 0.7 percent to 2,504.
VOLATILITY: Trading has been highly volatile in December, capping a year of turbulence for markets. The major U.S. stock indexes closed last week with their first weekly gain in what’s been an otherwise painful month. The Dow Jones Industrial Average and S&P 500 rose more than 2 percent for the week, while the Nasdaq added nearly 4 percent. The indexes are still all down around 10 percent for the month and on track for their worst December since 1931.
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TRUMP TRADE: Investor sentiment was supported by Trump’s tweet on Sunday saying he had a “long and very good call” with Xi. “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.” Meanwhile, the official Xinhua News Agency cited a Chinese Foreign Ministry spokesman as saying that “China stands ready to work with the United States to move forward the China-U.S. ties which are underpinned by coordination, cooperation and stability.” Prospects for an agreement to forestall more U.S. penalty tariffs on Chinese exports remain uncertain, analysts say.
ANALYST’S VIEWPOINT: “Whilst President Trump has lauded ‘big progress’ in trade talks with China following a phone call with Xi during the weekend, it remains to be seen how much this can boost investor confidence given that market reaction on recent positive development has largely been muted,” Mizuho Bank said in a markets commentary. It added that the market was likely to “stay put at this point and wait for further solid evidence” following expected meetings in January.
CHINA MANUFACTURING: Factory activity weakened further in December, an official survey showed Monday, boosting pressure on Beijing to reverse an economic slowdown as it heads into trade talks with Washington. The purchasing managers’ index of the National Bureau of Statistics and an industry group, the China Federation of Logistics and Purchasing, fell to 49.4 from November’s 50.0 on a 100-point scale on which numbers below 50 show activity contracting.
ENERGY: Benchmark U.S. crude oil gained 71 cents to $46.04 per barrel in electronic trading on the New York Mercantile Exchange. It advanced 72 cents on Friday. Brent crude, the benchmark for international prices, gained 97 cents to $54.19 per barrel.
CURRENCIES: The dollar dipped to 109.98 yen from 110.28 yen last Friday. The euro rose slightly to $1.1455 from $1.1442.