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Dec 31, 2021

S&P 500 rallies to close the year at record high

BNN Bloomberg's closing bell update: December 31, 2020

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U.S. stocks climbed to a record high on the year’s final trading day amid thin trading. The dollar eked out an advance.

The S&P 500 Index and Dow Jones Industrial Average turned positive in the afternoon and ended at all-time highs. Volume was about 15 per cent below average on the S&P. Financial companies were among the best performers, while energy producers slumped. European stocks dipped. Markets in Japan, Germany and South Korea were shut for New Year’s Eve.

In Asia, China’s benchmark CSI 300 Index closed at a five-year high as officials gave the green light to its first coronavirus vaccine for general public use and data showed a steady economic recovery. The offshore yuan strengthened to the highest since June 2018.

The S&P 500 ended the year up more than 16 per cent, leaving equities at rich valuations amid expectations that widespread vaccine distribution in 2021, central bank support and government aid will reignite economic growth and boost corporate profits. The gains were global, with the MSCI World Index of stocks at a record high after having risen 14 per cent in 2020.

“Investors are breathing a sigh of relief that some stimulus is getting out there,” said Chris Gaffney, president of world markets at TIAA Bank. This “has been an unprecedented year, and I think that some of the risks that we entered into 2020 with, we’re leaving without those risks.”

While volume on the S&P 500 was subdued Thursday relative to the norm for this year, it would’ve looked like an active day in 2019. Last year, an average 7 billion shares changed hands a day across U.S. exchanges. This year, a typical day has seen 10.8 billion shares trade.

Against a subdued backdrop in stocks this week, the frenzy in cryptocurrencies shows no signs of slowing down. Bitcoin vaulted above US$29,000 on Thursday before pulling back. The digital asset has advanced about 50 per cent in December for the biggest monthly jump since May 2019.

On the coronavirus front, global deaths from COVID-19 passed 1.8 million. New York state and Florida both shattered their previous daily records for cases. California became the third state to pass 25,000 fatalities, after New York and Texas. Governments across the globe urged people to celebrate the New Year at home.

“You’ve seen kind of a few blissfully un-volatile days after what I think we can all agree was quite a year,” said Giorgio Caputo, senior fund manager at J O Hambro Capital Management. “It’s given market participants a holiday gift.”

These are the main moves in markets:

Stocks

  • The S&P 500 Index rose 0.6 per cent as of 4 p.m. in New York.
  • The Stoxx Europe 600 Index fell 0.3 per cent.
  • The MSCI Asia Pacific Index was little changed.
  • The MSCI Emerging Market Index rose 0.1 per cent.

Currencies

  • The Bloomberg Dollar Spot Index rose 0.1 per cent.
  • The euro decreased 0.7 per cent to US$1.2213.
  • The British pound rose 0.3 per cent to US$1.3663.
  • The Japanese yen fell 0.1 per cent to 103.27 per dollar.

Bonds

  • The yield on 10-year Treasuries fell one basis point to 0.91 per cent.
  • Germany’s 10-year yield was little changed at -0.575 per cent.
  • Britain’s 10-year yield decreased two basis points to 0.19 per cent.

Commodities

  • West Texas Intermediate crude was little changed at US$48.42 a barrel.
  • Gold rose 0.2 per cent to US$1,898.50 an ounce.

--With assistance from Andreea Papuc, Anchalee Worrachate and Claire Ballentine.

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