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Global shares edge lower as markets reach the end of a blockbuster year

Revellers in Times Square, New York, celebrate New Year’s Eve.

Reuters/Keith Bedford

  • Global shares traded steadily on Friday, on the final trading day of 2021, which has seen stocks hit all-time highs.
  • Most Asian and European markets were closed for the New Year’s holiday, but the FTSE 100 was down 0.4% in early trade.
  • Crude oil eased but was still on track for a gain of more than 50% in 2021.

Global shares edged up on Friday in the final trading day of a year that has seen stocks hit record highs and cryptocurrencies surge into mainstream finance. 

The MSCI All-World Index was last up 0.1%, just shy of record highs. Ultra-low interest rates, cheap central bank cash, and a boom in economic activity, following the worst of the pandemic have drawn in trillions of dollars of investment in the stock market, in particular, this year.

But this combination has also boosted commodities and cryptocurrencies, many of which have hit all-time or multi-year highs, adding to a global surge in inflation. 

2022 promises to be a very different environment. Central banks are winching in lines of financial support to stop their economies from overheating. Meanwhile, the Omicron outbreak has served as a stark reminder of the impact of the coronavirus on everyday life, as governments have rushed in new restrictions and amped up their vaccination efforts. 

“Market sentiment continues to straddle fears of near-term Covid restrictions and expectations of a swift recovery, with value and growth names fluctuating as a result,” Joshua Mahony, a market strategist at broker IG, said.

“Nonetheless, the move towards higher rates and higher yields should bring a rare period of outperformance for value names once the Omicron wave starts to subside,” he said.

US stock futures teetered either side of unchanged, with those on the S&P 500, Nasdaq 100 and Dow Jones down 0.1%. The S&P 500 is heading for a gain of 27% this year, thanks in large part to rallies in the natural resources, finance, and tech sectors. The index hit a record high on Thursday.

“This move suggests traders are shifting away from broader market concerns and starting to pay attention to the pending Q4:2021 earnings and revenue data and the 2021 Annual Data that will hit over the next 30 to 60+ days,” trader Chris Vermeulen wrote for FXEmpire.

In Europe, most stock markets were closed for the New Year’s holiday. UK markets, which close after 12:30 p.m. London time, were down, with the FTSE 100 trading 0.4% lower on the day, while the midcap FTSE 250 fell 0.2%. Most Asian markets were also closed, except those in mainland China, where the Shanghai Composite closed up 0.6%. 

In the commodities sector, crude oil was down on the day, with Brent crude trading 0.3% lower at $79.27 a barrel, while WTI crude lost 0.4% to hold around $76.75 a barrel.

The entire energy complex has surged this year, thanks to a combination of pent-up demand from the pandemic and chronic underinvestment in new supply. The value of crude oil, natural gas, and coal have all soared, adding to central bankers’ headache over balancing inflation and economic growth. 

Bitcoin was last up 3.5% at around $48,426. The world’s most widely traded cryptocurrency has almost halved in value since hitting an all-time high of $69,000 in early November, but with a gain of 67% in 2021, it’s comfortably outperformed stocks and most commodity markets. 

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