A broad gauge of Asian share markets rose to an 18-month high on Monday as Chinese equities gained, while oil touched three-month highs on a combination of US crude inventory drawdowns, trade optimism and unrest in the Middle East.
But European shares were expected to open lower as investors take a breather from recent rallies.
In early European trade, the pan-region Euro Stoxx 50 futures were down 0.16 per cent at 3,764, German DAX futures were down 0.22 per cent at 13,291.5 and FTSE futures were down 0.11 per cent at 7,578.5.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose to its highest since June 19 before trimming gains. It was last up 0.05 per cent.
Chinese blue chips, which had started the day lower, were up 1.13 per cent in afternoon trade, bolstered by a report that 2019 retail sales are forecast to rise 8.0 per cent and expectations that a new benchmark for floating-rate loans could lower borrowing costs and boost flagging economic growth.
But Australian shares finished 0.25 per cent lower as investors continued to consolidate recent gains.
Japan’s Nikkei stock index finished its last trading day of the year down 0.76 per cent. The index gained 18.2 per cent in 2019 after dropping 12.8 per cent last year. Easing trade war worries and reduced uncertainty over the United Kingdom’s plans to leave the European Union after British elections returned a strong Conservative majority have offered a lift to global equities this month, helping the broad MSCI Asia index rise more than 6.0 per cent and putting it on track for its strongest month since January.
Kay Van-Petersen, global macro strategist at Saxo Capital Markets, said that limited liquidity near the year-end and the easing of US-China trade and Brexit uncertainties has “just left us drifting up higher. So even if there is a pullback... I don’t think it’s going to be significant by any means.”
Global equity markets gained late last week, with the S&P 500 and the Dow Jones Industrial Average closing at records on Friday.
The Dow ended 0.08 per cent higher at 28,645.26 and the S&P edged up just 0.11 points to 3,240.02. The Nasdaq Composite lost steam at the close, falling 0.17 per cent to 9,006.62.
Oil also gained on Friday, with prices posting their fourth consecutive weekly gain to steady around their highest in three months.
On Monday, global benchmark Brent crude was up 0.31 per cent to $68.37 per barrel, while US West Texas Intermediate crude added 0.13 per cent to $61.80, reversing an earlier decline.
Oil’s gains followed news of US air strikes in Iraq and Syria against Kataib Hezbollah, an Iran-backed militia group. US officials said Sunday that the attacks were successful, but warned that “additional actions” may be taken to defend US interests.
But Stephen Innes, strategist at AxiTrader, said that the rise of shale oil production in the United States would offset any geopolitical risks.
“Shale can really ramp up more volumes to accommodate any shortfall that could possibly be triggered by escalation in Syria,” he said, adding that an upsurge in populism in Iraq posed a larger risk to markets.
Iraq’s oil ministry said on Sunday that the halting of oil production at Iraq’s southern Nassiriya oilfield by protestors would not affect the country’s exports and operations.
Oil prices were also supported by a bigger-than-expected decline in crude inventories in the United States, the world’s biggest fuel consumer. Stockpiles fell by 5.5 million barrels in the week to December 20, far exceeding a 1.7-million-barrel drop forecast in a Reuters poll, the government data showed on Friday.
Gold also continued its run-up, boosted by a weak dollar, after posting its best week in more than four months on Friday amid thin trading volumes.
The precious metal on Monday rose 0.3 per cent to $1,515 per ounce on the spot market.
In the currency markets, the dollar was 0.27 per cent lower against the yen at 109.11 and the euro was up 0.23 per cent on the day at $1.1201.
The dollar index, which tracks the greenback against a basket of six major currencies, was down 0.14 per cent to 96.786.
The yield on benchmark 10-year Treasury notes was at 1.877 per cent compared with its US close of 1.873 per cent on Friday, while the two-year yield edged down to 1.5812 per cent compared with a US close of 1.589 per cent.