WALL STREET CLOSES BY INCREASING ITS WORST YEAR SINCE 10 YEARS
NEW YORK (Reuters) - The New York Stock Exchange ended up in volumes on Monday for the last session of 2018, the worst in ten years for US stocks.
The Dow Jones index gained 265.06 points on the day, or 1.15%, at 23,327.46 and the S & P-500, wider, took 21.11 points, or 0.85%, to 2,506, 85.
The Nasdaq Composite rose 50.76 points, or 0.77%, to 6,635.28.
The trend was supported by, among other things, the US President's remarks about the phone conversation he had over the weekend with his Chinese counterpart, Xi Jinping: Donald Trump spoke of "big progress" on the road to a trade agreement.
The Chinese official media were more reserved, simply reporting that Xi Jinping was hoping to see the two sides get along.
At the same time, the announcement of a contraction in Chinese manufacturing activity in December, for the first time since 2016 according to the official PMI index, fueled fears of a marked slowdown in the growth of the world's second-largest economy.
The month of December ended with a decline of 9.18% for the S & P-500, its largest monthly decline since February 2009 and its worst month of December since 1931. The Dow has yielded 8.66% over the month and the Nasdaq 9.48%.
For the full year, the S & P is down 6.24% while the Dow drops 5.63% and the Nasdaq Composite 3.88%, their largest decline since 2008.
These losses were concentrated in the last three months of the year with the combination of Sino-US trade tensions, rising interest rates, slower corporate profit growth, Brexit fears and "shutdown", the closure of part of the federal administrations for lack of budget agreement.
The S & P lost 13.97% in the fourth quarter, the Dow 11.83% and the Nasdaq 17.54%.
"We did very hard during most of the year, it is actually in the last quarter that the situation has collapsed a little," says JJ Kinahan, strategist TD Ameritrade. "People have become nervous mainly because of the unknowns that the market is facing."
And these unknowns may weigh on the trend again at least during the first weeks of 2019, say many investors.
"We are entering 2019 in uncertainty and everyone is in wait-and-see mode," says JJ Kinahan. "People are going to need something concrete before moving on."
The S & P Industrial Index, still sensitive to information on trade tensions, gained 1.01% on the day after Donald Trump's remarks about his interview with Xi Jinping. Boeing took 1.93% and Caterpillar 1.16%.
The best sectoral performance of the day, however, comes back to health with a gain of 1.39%. The sector posted an increase of 4.69% in 2018, one of only two positive annual performances among the 11 major sectors of Wall Street with Utilities (+ 0.19%).
The Dow's biggest rise over the year came from pharmacy and health giant Merck & Co with a jump of 35.8%.
In contrast, the S & P Energy Index posted the worst performance of the year on Wall Street, with a decline of 20.5% despite a gain of 0.45% on the day.
THE SESSION IN EUROPE
European equities ended the day slightly higher, supported among other things by the hope of trade compromise between Washington and Beijing.
In Paris, the CAC 40 finished with a gain of 1.11% to 4.730,69 points but fell 10.95% over the year, its worst annual performance since 2011.
In London, the FTSE, penalized by the strength of the pound, yielded 0.09% Monday for an annual decline of 12.5%, the highest since 2008. The stock exchanges of Frankfurt and Milan have remained closed for the Saint- Sylvestre.
The pan-European index FTSEurofirst 300 gained 0.42%, EuroStoxx 50 in the euro zone 0.55% and Stoxx 600 0.46%.
For all of 2018, the Stoxx 600 loses 13.2% and the EuroStoxx 50 falls by 14.3%, their worst growth since 2008 and 2011 respectively.
US government bond yields fell in some of the weakest volumes in a year.
At the end of the session, the 10-year issue was down 2.682%, down half a basis point from Friday's close. That of the two years yielded 0.44 basis points to 2.492% and that of the 30 years 0.3 point to 3.017%.
For the Treasuries market, the year 2018 was dominated by the flattening of the yield curve, with yield spreads between the main maturities falling to their lowest levels since 2007 (less than 19 basis points for two-decade gap).
The dollar ended the year with a retreat against a basket of reference currencies, as the risk appetite observed in equity markets deprived it of its safe haven appeal.
The "dollar index" dropped 0.29% on the day and the euro traded at the end of the session around 1.1460 dollar. It was trading at $ 1.20 in early January 2018.
Over the year as a whole, the greenback appreciated by 4.34% against a reference basket, its best annual performance since 2015.
Oil prices ended up higher for the last session of a year, which however ended with the first decline in the price of a barrel in three years.
The February contract on US light crude (West Texas Intermediate, WTI) gained eight cents on the day, or 0.18 percent, to $ 45.41 per barrel. The March deadline on Brent took 59 cents (1.11%) to 53.80 dollars.
Donald Trump's optimistic statements about trade talks between the United States and China allowed prices to gain up to more than 2 percent early in the session, but the market then erased some of his gains.
Among the factors that weighed on the trend is the announcement of a new oil production record for the United States in October, at more than 11.5 million barrels per day.
For the whole of 2018, the WTI price fell by 24.8% and that of Brent by 19%. And professionals interviewed by Reuters do not see any rebound on the horizon: they give Brent at $ 69.13 per barrel on average in 2019, against 71.76 dollars in 2018.
THINGS TO LOOK FOR WEDNESDAY JANUARY 2:
The first session of the year 2019 in the world's major financial markets will be driven mainly by the final figures of the monthly Markit IHS surveys of purchasing managers in the manufacturing sector in China and Europe.
(Stephen Culp, with Shreayashi Sanyal in Bangalore, Marc Angrand for French service)