World stocks tweaked out further modest gains on Thursday as they headed for the long New Year weekend in upbeat mood following a nine-month bull run that has seen many markets advance over 50 percent.
In Europe, the FTSE 100 index of leading British shares was up 10.22 points, or 0.2 percent, at 5,408.08 while France’s CAC-40 was 11.47 points, or 0.3 percent, higher at 3,946.97. Both indexes will close early for the New Year.
Germany’s DAX was closed after ending 2009 on Wednesday in a fairly downbeat note. It closed 0.9 percent lower at 5,957.43. Despite the modest retreat, the DAX ended the year around 24 percent higher.
Many other markets were also closed for the New Year festivities.
Two markets in Asia that were open were China’s Shanghai index and Hong Kong’s Hang Seng — both ended the year on an upbeat tone, rising 0.5 percent and 1.8 percent to finish the year at 3,277.14 and 21,872.50 respectively.
Over the year as a whole, the Shanghai index advanced 80 percent while the Hang Seng rose more than 50 percent, indicative many observers say of the continued solid economic growth recorded in China.
Big annual gains were visible elsewhere in Asia, including on Japan’s Nikkei 225 stock average, which ended the year Wednesday 19 percent higher than where it started at 10,546.44.
Wall Street is also expected to finish the year solidly — Dow futures were up 16 points, or 0.2 percent, at 10,506 while the broader Standard & Poor’s 500 futures rose 1.8 point, or 0.2 percent, to 1,123. Both U.S. indexes are set to finish the year over 20 percent, but they are up over 60 percent since March’s lows.
Stocks around the world have rallied hard since March’s lows — the Dow and the S&P 500 for example have surged more than 60 percent since then — as investors grew more optimistic about the global economic recovery after central banks and governments pushed through extraordinary policy measures to mitigate the deepest recession since World War II.
Much of that optimism appears to have been merited as most of the world’s leading economies have returned to growth, albeit at fairly subdued levels.
“The global financial system stabilized, helping avert a depression, as most asset classes began to feel the effects of extraordinary and coordinated policy intervention by the second quarter,” said Geoffrey Yu, an analyst at UBS.
The concern for stock market investors for 2010 is whether the rally has gone far enough in light of the likely economic conditions. With governments set to rein in their deficit spending and the central banks poised to start raising interest rates and withdrawing their big liquidity injections, many investors worry that the economic recovery will come to a grinding halt.
Fluctuations have been seen across all markets over the year.
For example, after an early year retreat, the price of a barrel of oil has nearly doubled over 2009. By midmorning London time, benchmark crude for February deliver was up 61 cents at $79.89, way up on the $43 at which it started the year.
In currency markets there have also been big fluctuations over the year, but many of the exchange rates are ending the year more or less where they started. The prevailing trend during the year was related to risk appetite — when investors were extremely downbeat as at the start of the year, the dollar was in demand given its widely viewed status as a safe haven currency, but when optimism returned they looked for potential rewards elsewhere.
By midmorning London time, the dollar was down 0.1 percent at 92.37 yen. Over the year, the dollar has traded in a fairly wide range between a 14-year low below 85 yen and above 100 yen.
Meanwhile, the euro was up 0.4 percent at $1.4397 yen. It too has fluctuated in a fairly wide range over the year too, from below $1.25 to above $1.50.
In 2010, the more traditional interest rate factors are expected to play a bigger role in the currency markets. As 2009 ends, the dollar has enjoyed a year-end rally as investors believe the U.S. Federal Reserve will start raising interest rates from their current record lows sooner than many of its peers, meaning that a dollar will yield more.