Stocks, futures waver as year draws to a close

European stocks slipped along with U.S. index futures on the last trading day of the year. The 10-year Treasury yield held above 1.5 per cent and the dollar was steady.

European stocks slipped along with U.S. index futures on the last trading day of the year. The 10-year Treasury yield held above 1.5 per cent and the dollar was steady.

With most European markets closed or shutting down early on Friday, trading was thin as investors drew a line under a strong year for global equities as economies recovered from the pandemic. Emerging markets and Asian benchmarks lagged, partly due to China’s regulatory pressures and slowing economy. Bond investors are nursing losses as many central banks move toward tighter monetary settings to fight inflation. How the coronavirus and those policy shifts shape economic reopening are key for the outlook.

“As we look forward to 2022 the gains are probably going to be more modest than they’ve been in the past year or so” partly given where valuations are now, Jason Pride, chief investment officer for private wealth at Glenmede, said on Bloomberg Television. But there’s reason for optimism too since “we’re still in the recovery from the pandemic,” he said.

The Stoxx Europe 600 index declined less than 0.1 per cent, hovering close to a record close after advancing more than 22 per cent this year. Among major markets, only the U.K. and France were open for trading and both are closing early. Contracts on the S&P 500 and Nasdaq 100 edged lower. The S&P 500 pulled back from a record high on Thursday but is 27 per cent up for the year.

Asian stocks got a fillip from a rally in a Hong Kong technology gauge following a surge in U.S.-listed Chinese shares. The Hang Seng Tech Index rose 3.6 per cent, while Chinese shares overall advanced. Those moves came in the wake of the Nasdaq Golden Dragon China Index’s biggest one-day jump Thursday since 2008, though it’s still down more than 40 per cent for 2021.