Global markets end the year with a whimper occasioned by China’s crisis

Greek cash crunch, rising US rates worsen an already fretting situation

Saturday January 2 2016

Demonstrators parade a white elephant made of cardboard symbolising buildings and government projects claimed to be wasting public money during the city's traditional January 1 march in Hong Kong on January 1, 2016. The protesters gathered to air a variety of grievances, from expensive construction projects to internet freedoms. PHOTO | PHILIPPE LOPEZ | AFP

Demonstrators parade a white elephant made of cardboard symbolising buildings and government projects claimed to be wasting public money during the city's traditional January 1 march in Hong Kong on January 1, 2016. The protesters gathered to air a variety of grievances, from expensive construction projects to internet freedoms. PHOTO | PHILIPPE LOPEZ | AFP  

By AFP
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NEW YORK

World stock markets ended 2015 with a whimper after sharp volatility sparked by China’s slowdown, eurozone stimulus, the Greek crisis, rising US rates and a commodities rout.

“After a year that began so promisingly the markets are wrapping up 2015 in the limpest way possible, a collective sigh instead of any attempt at New Year’s Eve fireworks,” said Spreadex analyst Connor Campbell.

Asian equities limped across the finish line after a tumultuous 2015 that also witnessed a summer melt-down on the battered Chinese stock exchange.

Later in the global day, European shares slumped and US stocks also fizzled, with a final-day sell-off pushing the S&P 500 to a modest loss for the year, marking its first annual decline since 2011.

“The good news is we did not have a bear market, but the bull market stopped,” said Hugh Johnson of Hugh Johnson Advisors. “The real problem is valuation.”

RECORD-BREAKING RUN

European and US markets had enjoyed a record-breaking run at the start of the year, boosted by the expectation and then delivery of European Central Bank’s quantitative easing (QE) stimulus and the resilience of the US economy amid a global slowdown.

Investors fretted on uncertainty over the Federal Reserve’s first interest rate hike in almost a decade, but shrugged when the US Central Bank eventually lifted borrowing costs in December.

China’s economic slowdown also plagued trading floors in 2015 and sent commodities reeling because the Asian giant is a top consumer of many raw materials.
Oil prices collapsed on global oversupply, culminating in an 11-year low for Brent crude last week.

“There have been two distinct periods to the markets this year. The first third ... of 2015 saw the European and US markets all surge to fresh all-time highs, prompted by the promise, and delivery, of (ECB chief) Mario Draghi’s long awaited quantitative easing plan,” Campbell told AFP.

“Yet as the year went on, the euphoric trading atmosphere began to sour,” he said, as attention shifted to unease over Greek debt, the sinking Chinese stock market and an impending US rate hike.

HOLIDAY TRADE

Over the course of the year, Frankfurt — which was closed Thursday — and Paris have won almost ten per cent in value. London’s commodities-heavy shares index was however down 5.0 per cent.

In light holiday trade on Thursday, the British capital’s FTSE 100 finished 0.5 per cent lower. The French CAC 40 ended down 0.9 per cent.

In New York, the S&P 500 dropped 0.9 per cent to close the year out with a 0.7 per cent loss.

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