Monday, December 30, 2019

S&P500 looks set for biggest annual gain since 2013; dollar suffers sharpest decline since October

  • Dollar
  • Stocks
  • Federal Reserve
  • Nasdaq

US equities ended the day mixed on Friday thanks to increasing optimism for the US-China phase one trade deal. Major US indices advanced early in the day but retreated slightly before US markets closed for the day. The S&P500 inched slightly higher to gain 29.25% YTD, set to make its biggest annual returns since 2013. The Nasdaq ended its 11-day winning streak and retreated 0.17%.

Global indices gained over the past week as investor sentiment picked up. The Nasdaq led US major indices with gains from Apple, Amazon and Microsoft over the week. In Asia, the Hang Seng Index led gains despite continued protests in the financial hub over the Christmas holiday.

In the forex market, the dollar fell sharply against major currencies as investors’ growing risk appetite put downward pressure on the safe haven aspect of the greenback.

Demand for other safe haven assets also fell on Friday, with gold and silver both suffering losses even after the dollar fell sharply. The yen rose against the dollar, but fell against the euro. US Treasury yields fell, with two-year yields falling the most by 5bps.

Asian stocks drifted lower on Monday morning but looks set to make strong gains in 2019. The Nikkei and KOSPI opened 0.28% and 0.07% weaker, while the ASX200 and Straits Times Index fell later in the morning. But US equity futures remain strong, with futures tracking the three major US indices in the green on Monday morning.

Trading volumes is expected to remain low this week thanks to the New Year's holiday. But the FOMC's December monetary policy meeting minutes and US's ISM Manufacturing PMI for December will be the focus as investors return from the holiday break.