As the decade ends, traders lock in share market gains
Asian shares fall as investors take profits after 2019 rally.
Asian shares were mostly lower on Tuesday, in their last trading day of the decade as investors locked in profits after a buoyant year of gains, driven in recent weeks by hopes of an imminent United States-China trade deal.
European equity markets were expected to follow suit after losses on Wall Street Monday. In early deals, pan-region Euro Stoxx 50 futures were down 1.19 percent at 3,725, German DAX futures were down 1.45 percent at 13,128 and FTSE futures were down 0.37 percent at 7,508.
But US stock futures showed some optimism ahead of Wall Street’s final session of the year, with S&P 500 e-minis up 0.12 percent at 3,227.3.
At about 06:20 GMT, MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.46 percent lower, set for its weakest performance since Dec. 4. For the month, the index is still up 5.6 percent.
The index has gained nearly 16 percent this year, a sharp turnaround from a 16.2 percent drop last year but lagging a 23.8 percent year-to-date gain in MSCI’s global share index. The Asian index gained 33.5 percent in 2017, about the same as its total rise over the previous decade.
Australian shares ended their best year since 2009 1.78 percent lower, and Hong Kong’s Hang Seng finished down 0.46 percent in a half-day session.
“We are seeing some profit-taking into year-end,” said Ryan Felsman, senior economist at CommSec in Sydney, adding that progress on resolving the 17-month-long US-China trade war remained a positive factor for investors into the new year.
“Politics has to remain front and center for investors” in 2020, Hannah Anderson, global market strategist, JPMorgan Asset Management, said in a note on Tuesday. “The US-China trade war is far from resolved. Negotiations continue over the details of a phase one deal, but policymakers acknowledge many thorny issues remain. Returns will depend on just how tolerant investors can be of their fears in a low growth world.”
‘Green shoots’
The White House’s trade adviser on Monday said the US-China Phase 1 trade deal would likely be signed in the next week, but said confirmation would come from President Donald Trump or the US Trade Representative.
“We think that the global growth situation is improving, we’re seeing better industrial profits in China … green shoots in the manufacturing sector on the back of an improvement in the trade situation is a key catalyst going forward,” he said.
While easing trade concerns and lifting uncertainty around Britain’s exit from the European Union have helped reduce some near-term market uncertainty, investors remain worried about a recession, seen as inevitable in the new decade.
Positive Chinese manufacturing data, which showed factory activity expanding for a second straight month in December, nudged China’s blue-chip CSI300 index 0.3 percent higher, extending the more-than-33 percent gain seen this year.
China’s gains built on Monday’s rally, which was driven by a combination of strong retail sales growth and hopes that a new benchmark for floating-rate loans could lower borrowing costs.
Markets in Japan and South Korea were closed for a holiday.
The falls in Asia came after profit taking pushed the Dow Jones Industrial Average down 0.64 percent to 28,462.14, the S&P 500 0.58 percent lower to 3,221.29 and the Nasdaq Composite off 0.67 percent to 8,945.99.
The dollar continued to weaken against the yen for a third straight session, dropping 0.20 percent to 108.65 and hitting its lowest level since December 12. The euro strengthened 0.06 percent to buy $1.1204.
The dollar index, which tracks the greenback against a basket of six major rivals, was 0.05 percent lower at 96.692.
US crude dipped 0.13 percent to $61.60 a barrel and Brent crude edged down to $66.65 per barrel. The global benchmark remains up 23.8 percent for the year.
Gold continued its rally on a weakening dollar. On the spot market, the precious metal was changing hands at $1,523.14 per ounce, up 0.53 percent. Gold prices have risen 18.7 percent so far this year.