Global shares gain in record year-end rally, dollar slips

By Herbert Lash

NEW YORK (Reuters) – World equity markets scaled records on Friday with global growth prospects raised by upbeat Chinese economic data and optimism a U.S.-Sino trade deal is imminent, but the year-end rally ebbed on Wall Street and the dollar eased as risk appetite grew.

Wall Street set all-time highs early and European shares rose to a third day of record peaks this week as various U.S. and European indexes remained set to post their best year since the global financial crisis a decade ago.

Profits at Chinese industrial firms grew at the fastest pace in eight months in November, rising 5.4% from a year earlier to 593.9 billion yuan ($84.93 billion). The gains snapped three months of decline, but broad weakness in domestic demand remains a risk for Chinese corporate earnings in 2020.

The U.S.-China trade war has rattled international commerce. Trade between the world’s two largest economies fell 15.2% in the 12 months through November from the same period in 2018, according to Panjiva, a S&P Global Market Intelligence unit.

The dollar slipped across the board as growing risk appetite sapped the safe-haven appeal of the greenback.

MSCI’s gauge of stock performance in 49 countries <.MIWD00000PUS> gained 0.26% while the pan-European STOXX 600 index <.STOXX> rose 0.21%, both setting all-time highs.

In Europe, financial services <.SXFP>, industrial <.SXNP>, chemicals <.SX4P> and health care <.SXDP> notched intraday record highs. The STOXX 600 index is up 24% this year.

Equity markets are poised to rise further in 2020, even as high valuations pose a concern, said Rahul Shah, chief executive of Ideal Asset Management in New York.

“Considering the dynamics of the market right now we think that equity investors should be positioning for further bullish momentum in 2020,” Shah said.

“Valuations have been ticking up a little bit, but there have been many times in market history where valuations stay above average for a while,” he said.

Wall Street’s three main indexes lost steam at the close, with the Nasdaq edging lower and the S&P 500 just a fraction higher.

The Dow Jones Industrial Average <.DJI> rose 23.87 points, or 0.08%, to 28,645.26. The S&P 500 <.SPX> gained 0.11 points, or 0.00%, to 3,240.02 and the Nasdaq Composite <.IXIC> dropped 15.77 points, or 0.17%, to 9,006.62.

The S&P 500 closed four-tenths of a percentage point shy of surpassing a 29.6% gain in 2013, which would give the U.S. benchmark its best year since 1997.

Overnight in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> jumped 0.8% to 555.39, a level not seen since mid-2018. It is up 15.5% so far this year.

Emerging market stocks rose 0.58%.

Germany’s benchmark 10-year Bund yield held steady below recent six-month highs of about -0.21% reached last week, while U.S. Treasury yields fell as government debt found support following a sell-off that sent yields to one-month highs.

Yields have risen amid increased risk appetite driven by optimism that a Phase 1 U.S.-Sino trade pact will spur global growth and as major central banks inject liquidity into the market.

Ten-year bond yields in Germany <DE10YT=RR>, France <FR10YT=RR> and the Netherlands <NL10YT=RR> were broadly steady having dipped a basis point in early trade.

Benchmark 10-year notes <US10YT=RR> rose 9/32 in price to push yields down to 1.8752%.

The euro rose to a 10-day high. The dollar index <.DXY> fell 0.52%, with the euro <EUR=> up 0.7% to $1.1174. The Japanese yen <JPY=> strengthened 0.19% versus the greenback at 109.45 per dollar.

Oil prices edged down from three-month highs as Russian Energy Minister Alexander Novak made comments that fed doubts about crude output cuts next year from the Organization of the Petroleum Exporting Countries and allied producers including Russia, a group known as OPEC+.

Brent crude <LCOc1> settled up 24 cents to $68.16 a barrel, while West Texas Intermediate <CLc1> rose 4 cents to settle at $61.72 a barrel.

U.S. gold futures <GCcv1> climbed to a seven-week high of $1,519.90 an ounce, and settled up 0.2% higher at $1,518.10.

(Reporting by Herbert Lash, additional reporting by Terence Gabriel in New York; Editing by Richard Chang, Daniel Wallis and David Gregorio)