Stocks set for best year since 2013 as euro lifts: Markets wrap

Bloomberg.- Global stocks were set to close a tumultuous year with the biggest gain since 2013, even as European and Japanese equities angled for their first annual decline in five years. The euro spiked higher as the dollar rally continued to fizzle and commodities advanced in thin end-of-year trading.

The MSCI All-Country World Index was little changed, though set for 5.7 percent advance for the year. Japan’s benchmark Topix index and the Stoxx Europe 600 index were set for the first yearly decline since 2011. A gauge of the dollar shifted lower after reaching the highest level in more than a decade earlier this week, and raw materials headed for the best week in four.

The year for financial assets started on a sour note from the first day of trading, with the MSCI World gauge tumbling 2 percent. China-fueled turmoil sent stock markets from Tokyo to India into bear markets in the first two months of 2016. Oil reached a 13-year low while the dollar slid to its weakest level in a year. The second half of the year surprised many analysts, as financial markets powered past the Brexit shock while Donald Trump’s presidential victory provided an unexpected boost.
“2016 was perhaps one of the biggest roller-coasters driven by political events,” said Dmitri Petrov, a strategist at Nomura International Plc in London. “It’s not so much the actual realized volatility of asset markets, but volatility of market view around the global macro and policy outlook that made it exceptional.”

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Currencies

– The euro rallied as much as 1.6 percent before paring its advance to 0.6 percent and trading at $1.0554 as of 12:14 p.m. in London.
– The yen fell 0.4 percent to 116.97 per dollar, erasing an earlier advance of 0.4 percent. The currency was up more than 20 percent for the year in August, but has pared that to 2.8 percent.
– The Bloomberg Dollar Spot Index slipped 0.3 percent after dropping 0.5 percent Thursday, although it remains up 2.8 percent for the year.
– The pound was on track for a monthly decline versus the dollar, its ninth this year and wrapping up its steepest annual drop since the global financial crisis of 2008.
– Sterling was on track for a more than 16 percent drop against the dollar this year and was the worst performing Group-of-10 currency in 2016 despite the recent stabilization.

Stocks

– The Stoxx Europe 600 Index fell 0.3 percent in a second day of losses. The gauge is set to end the year with the first annual loss since 2011.
– The U.K.’s FTSE 100 Index is heading for one of the best performances among western-European markets in 2016, thanks to a slumping pound that boosted its exporters and a rally in commodity producers. The measure fell 0.3 percent on Friday, after closing at a record earlier this week.
– Benchmarks of Italy, Portugal and Denmark are poised to be the biggest losers of the year, down at least 10 percent.
– The MSCI Asia Pacific Index was little changed, up 2.2 percent for the year, its first annual gain since 2013.
– S&P 500 Index futures rose 0.2 percent. The index is up 10 percent this year.

Commodities

– The Bloomberg Commodity Index, which measures returns on raw materials, climbed 0.2 percent, putting it on course for a 12 percent advance. This would be the first increase since 2010.
– Crude futures were little changed at $53.81 a barrel, after Thursday’s 0.5 percent decline. Prices are up about 45 percent this year. Supply cuts from OPEC and other producing nations next month are intended to stabilize the market and reduce swelling global inventories.
– Gold’s 0.1 percent advance to $1,159 an ounce extended its rally into a fifth day, the longest since Nov. 4. The metal is up more than 9 percent for the year.

Bonds

The yield on 10-year Treasury notes was little changed at 2.48 percent after dropping three basis points Thursday. It slid to 2.46 percent earlier in the week, the lowest since Dec. 14.

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