Dollar, oil and stocks look to end year on triumphant note

Gold set to snap 3-year losing streak with 9 pct gain in 2016

NEW YORK, Dec 30, (Agencies): The dollar, oil and US stocks slipped on Friday in thin pre-holiday trading on the last trading day of 2016, but were well on track to notch up sizable gains for the year.

The dollar was on pace for a fourth straight year of gains against a basket of major currencies, while oil prices were headed for their best year since 2009.

Global markets have fared surprisingly well in a year marked by major political shocks, including June’s Brexit vote and the unexpected election of Donald Trump as US president in November.

On Friday, MSCI’s world index, which tracks shares in 46 countries, was little changed and on pace to finish the year up 5.6 percent.

Strength in Asian and European shares helped the index, but weakness on Wall Street weighed.

US stocks slipped following weak economic data and a decline in technology stocks.

After a spate of robust economic reports, the Chicago Purchasing Manager Index fell more than expected to 54.6 in December.

“The market is ending 2016 with a whimper. We entered the rally like a lion, but are leaving as a lamb,” said Andre Bakhos, managing director of Janlyn Capital in Bernardsville, New Jersey.

The S&P 500 technology sector fell 0.98 percent, dragged down by weakness in the shares of Microsoft and Facebook.

The Dow Jones Industrial Average was down 32.28 points, or 0.16 percent, to 19,787.5, the S&P 500 lost 7.88 points, or 0.35 percent, to 2,241.38 and the Nasdaq Composite dropped 46.11 points, or 0.85 percent, to 5,385.98.

Europe’s broad FTSEurofirst 300 index closed up 0.24 percent at 1,428.4

The dollar index, which measures the greenback against a basket of six major rivals, was set to gain 3.6 percent for the year, even as the euro briefly climbed by about two full cents in overnight trading to $1.0651, its highest since Dec 14. The index was down 0.43 percent on Friday.

The dollar has rallied hard since the Nov 8 US presidential election on expectations that President-elect Donald Trump’s plan to boost fiscal stimulus would benefit the currency, even as doubts linger about how much dollar appreciation a Trump White House will tolerate.

“In general, I expect the dollar to continue to gain.”

Oil prices were down for the day, but still on track for their biggest annual gain in seven years after OPEC and other major producers agreed to cut output to reduce a global supply overhang that has depressed prices for two years.

Brent crude was down 0.47 percent at $56.58 a barrel, while US crude was down 0.33 percent at $53.59.

In bond markets, US Treasuries were little changed across the curve in thin pre-holiday trading. Treasuries ended the fourth quarter with their poorest performance in the history of the Merrill Lynch Treasury index, with a -4.175 percent return, through Thursday.

The sell-off during the year’s final quarter was due largely to Trump’s election victory, analysts said, and the expectation of looser fiscal policy and rising interest rates based on his campaign promises of increased infrastructure spending and tax cuts.

Benchmark 10-year notes were down 9/32 in price to yield 2.446 percent, little changed from 2.477 percent late on Thursday.

Spot gold prices were down 0.47 $1,152.83.

US

US stocks fell on the last trading day of 2016, eating into gains for the year, as Apple led a decline in technology stocks.

The S&P 500 technology sector’s 0.72 percent drop put the broader index on track for its third straight day of declines, its longest losing streak since Nov 4.

The Dow Jones Industrial Average was set for its weekly decline since the US election. The rally had pushed the index to within 13 points of 20,000 last week, but after three straight days of losses, the index is now about 200 points shy.

“The market is ending 2016 with a whimper. We entered the rally like a lion, but are leaving like a lamb,” said Andre Bakhos, managing director of Janlyn Capital in Bernardsville, New Jersey.

“It is disappointing on many levels as investors believed that we are going to see the Dow at 20,000. The euphoria that was in motion in the Trump rally has fizzled.”

Until Thursday, the three main Wall Street indexes were set to end the year with double-digit percentage gains. The S&P is now on track to post a gain of 9.7 percent for the year, the Nasdaq 7.8 percent and the Dow 13.7 percent.

At 12:35 pm ET (1735 GMT) the Dow was down 20.2 points, or 0.1 percent, at 19,799.58, the S&P 500 was down 5.87 points, or 0.26 percent, at 2,243.39 and the Nasdaq Composite was down 38.38 points, or 0.71 percent, at 5,393.71.

Seven of the 11 major S&P 500 sectors were lower, with technology and consumer discretionary stocks taking the biggest hit.

Apple was the biggest drag on all three indexes, falling 0.6 percent to $115.98 after the Nikkei financial daily reported that the company would cut production of the iPhone by about 10 percent.

Apple suppliers also dropped on the news. Qualcomm, Skyworks Solutions, Cirrus Logic and Qorvo were down between 1 percent and 2 percent.

Declining issues outnumbered advancers on the NYSE by 1,444 to 1,402. On the Nasdaq, 1,795 issues fell and 1,004 advanced.

The S&P 500 index showed one new 52-week high and no new lows, while the Nasdaq recorded 35 new highs and 36 new lows.

Europe

Most world stocks markets were finishing 2016 in positive territory despite shock votes in Britain and the United States, but the outlook for 2017 is clouded by looming European elections and Brexit.

This year witnessed a wave of antiestablishment populism, which saw Britain vote to leave the EU and maverick billionaire businessman Donald Trump elected as US president.

Both unexpected outcomes sparked a brief tumble on global equity markets — but many have since staged a stunning recovery to finish 2016 in the black.

London’s FTSE 100 has gained 14.3 percent over the year, while Frankfurt’s DAX 30 added about 6.9 percent and the Paris CAC 40 won 4.9 percent.

Since Brexit, London’s FTSE 100 blue-chip index has soared to end the year in record-breaking form, as the British economy shrugged off the impact of the impending divorce from the EU.

In a half-day of trading on Friday, the FTSE 100 set a new intraday and closing high of 7,142.83 points.

Key figures around 1630 GMT London — FTSE 100: Up 0.3 percent at 7,142.83 points (close)

Frankfurt — DAX 30: Up 0.3 percent at 11,481.06 (close)

Paris — CAC 40: Up 0.5 percent at 4,862.31 (close)

EURO STOXX 50: Up 0.3 percent at 3,282.93

Asia

Tokyo retreated again Friday despite Toshiba’s shares ending their three-day free fall but Hong Kong rallied as Asian markets brought down the curtain on a volatile year.

With Wall Street inching back further from breaching the historic 20,000 barrier, the Nikkei fell for a third day, dropping 0.2 percent, while the yen lost ground against the dollar.

Despite Friday’s fall, Japan’s benchmark index rose 0.42 percent in 2016, marking the fifth consecutive annual increase, with the market clawing back losses earlier in the year after Donald Trump’s election victory.

“Trump was a game changer,” said Hisao Matsuura, chief strategist at Nomura Securities.

And shares in troubled Toshiba bounced back following a bloodletting since Tuesday that saw investors dump stock over a massive one-time loss.

Hong Kong advanced one percent, with the Hang Seng ending the year marginally up. Australian stocks finished 0.6 percent down, paring the year’s gain to seven percent. Seoul was closed for a holiday.

Shanghai recorded a rise of 0.2 percent but stocks in the world’s second largest economy have endured a torrid year, down more than 12 percent as the market was buffeted by feckless policymakers, massive capital flight and a languishing currency.

Key figures around 0800 GMT Tokyo — Nikkei 225: Down 0.2 percent at 19,114.37 (close)

Hong Kong — Hang Seng: Up one percent at 22,000.56 (close)

Shanghai — Composite: Up 0.2 percent at 3,103.64 (close)

Oil

Oil prices were down on Friday, but were still on track for their biggest annual gain since 2009 after OPEC and other major producers agreed to cut output to reduce a global supply overhang that has depressed prices for two years.

US benchmark West Texas Intermediate (WTI) crude futures were down 25 cents at $53.52 a barrel by 9:38 am EST (1438 GMT) on Friday, while Brent fell 26 cents to $56.59.

Brent has risen about 50 percent this year and WTI has climbed around 43 percent, the largest annual gains since 2009, when Brent and WTI rose 78 percent and 71 percent respectively.

Oil prices have more than halved since the summer of 2014, when it was above $100 a barrel. The fall in prices due to oversupply, in part thanks to the US shale oil revolution, was accentuated later that year when Saudi Arabia rejected any OPEC deal to cut output and instead fought for market share.

Gold

Gold hit a two-week high on Friday on a weaker dollar and was set to close 2016 about 9 percent higher, snapping three years of declines.

Spot gold reached its highest since Dec 14 at $1,163.14 an ounce, before retreating to trade 0.1 percent lower at $1,157.56 by 1427 GMT.

US gold futures were unchanged at $1,158.60 an ounce.

In the first half of 2016, investors increased gold exposure as the Federal Reserve showed caution on raising interest rates due to concerns about global growth, while Britain’s vote to leave the European Union curbed appetite for risk and pushed the metal to a two-year high in July.