Stocks and dollar droop in thin year-end trade, 2024 uptrends intact
Global stocks, the dollar and some Treasury yields looked set to wrap up Christmas week on Friday with minor retracements of broad up-trends, succumbing to a dearth of interest and participation heading into the last weekend of the year.
Wall Street's main indexes opened lower, dampening an upbeat holiday-shortened week that started out looking like a classic "Santa Claus" rally was unfolding. The benchmark 10-year Treasury yield was up slightly but hovered below a near-eight-month high reached Thursday, while shorter-term Treasury yields eased.
The U.S. dollar was headed for an almost 7% annual gain while Japan's yen was set for a fourth consecutive year of losses on Friday, as traders anticipated robust U.S. growth, as well as tax cuts, tariffs and deregulation by the incoming administration of President-elect Donald Trump, would make the Federal Reserve cautious on rate-cutting well into 2025.
The Dow Jones Industrial Average was 0.56% lower after the open. The S&P 500 fell 0.65%, leaving Wall Street's benchmark on course for a 1% weekly gain. The Nasdaq Composite was down 0.79% in early trade.
The Dow is up 14% in 2024, the S&P 500 is up 25% and the tech-heavy Nasdaq is up 30%.
Analysts said stock markets could change direction as investors returned from holiday and reassessed the risks of elevated U.S. inflation under Trump for richly-valued Wall Street equities.
"There is some potential upside left for this bull market, but it is limited," said Pictet Asset Management chief strategist Luca Paolini.
(Trump's) inauguration day is a potential inflection point and all the (prospective) good news will be in the price by then," Paolini added.
MSCI's broad global share index was 0.32% lower on Friday to remain 1.07% higher for the week.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.12%, marking a 1.5% weekly rise, while Tokyo's Nikkei rose 1.8%.
Europe's Stoxx 600 was 0.27% firmer on Friday and 0.7% higher for the week.
The dollar index, which measures the currency against six other major currencies, eased 0.09%, looking at a small weekly gain, and to close 2024 with a more than six percent year-on-year gain.
Dollar/yen was down 0.15%, but near levels last seen in July, while the greenback was also showing a 5.3% gain this month against the yen and a near 12% advance for 2024 against the weakened Japanese currency. The euro , up 0.09%, stayed close to two-year lows.
The BoJ held back from a rate hike this month. Governor Kazuo Ueda said he preferred to wait for clarity on Trump's policies, underscoring rising angst among central banks worldwide of U.S. tariffs hitting global trade.
Fed Chair Jerome Powell said earlier this month that U.S. central bank officials "are going to be cautious about further cuts" after an as-expected quarter-point rate reduction.
The U.S. economy also faces the impact of Donald Trump, who has proposed deregulation, tax cuts, tariff hikes and tighter immigration policies that economists view as both pro-growth and inflationary.(Cay)
Source: Investing.com
