NEW YORK, Dec 28 ― A wild Christmas week ride in global markets continued yesterday as stocks rallied from significant losses to post gains for the day.
For the second consecutive session, early weakness in markets turned to strength by the time US stocks closed as investors shuffled their portfolios.
“We had a very wild ride today,” said David Kelly, chief global strategist for JP Morgan Chase & Co’s asset management unit, on a conference call. “It really is not about fundamentals. There is nothing in the fundamental picture of the US economy that would justify the kind of moves that we’ve seen.”
A report early in the day showed the number of Americans filing applications for jobless benefits fell marginally last week in a sign of labor market strength. But other news was dismal, including the Conference Board’s consumer confidence index dropping to a five-month low in December and earnings at China’s industrial firms falling in November for the first time in nearly three years.
Meanwhile, there is no end in sight to the US-China trade war or the partial shutdown of the US government.
Investors often sell assets that have done well and buy those that have done the worst, including many stocks, at the end of the quarter to “rebalance” their portfolios. Some traders also cited investors closing out short positions among the reasons for Wall Street’s late rally.
The Dow Jones Industrial Average rose 260.37 points, or 1.14 per cent, to close at 23,138.82, the S&P 500 gained 21.13 points, or 0.86 per cent, to 2,488.83 and the Nasdaq Composite added 25.14 points, or 0.38 per cent, to 6,579.49.
MSCI’s gauge of stocks across the globe gained 0.58 per cent, rising further from near two-year lows hit earlier this week.
The late US stock rally left intact other aspects of the bearish market trend that has developed of late, with a weaker US dollar and lower oil prices, along with stronger demand for safe-haven government bonds, gold and the Japanese yen.
International Brent crude futures settled down 4.2 per cent at US$52.16 (RM217.48) per barrel after staging a big rally on Wednesday as concerns about an oil glut weighed on the market.
US Treasury prices reversed direction after falling sharply on Wednesday, with the 10-year note last rising 4/32 in price to yield 2.7845 per cent.
Gold, another safe haven, was up 0.6 per cent to US$1,275 an ounce, around six-month highs.
Investors also bought yen, boosting the currency 0.27 per cent versus the greenback at 111.08 per dollar. Against a basket of trading partners’ currencies, the dollar was down 0.52 per cent.
“We have started to see the yen regain its place as the safe haven of choice,” said Lee Hardman, an analyst at MUFG in London. ― Reuters
Source: The Malay Mail Online