Asian shares crept higher on Monday as hints of progress on the Sino-US trade standoff provided a rare glimmer of optimism in what has been a rough year-end for equities globally.
Survey data out of China, however, proved unhelpfully mixed with manufacturing activity contracting for the first time in two years even as the service sector improved.
Sentiment had brightened just a touch when US President Donald Trump said he held a “very good call” with China’s President Xi Jinping on Saturday to discuss trade and claimed “big progress” was being made.
Chinese state media were more reserved, saying Xi hoped the negotiating teams could meet each other half way and reach an agreement that was mutually beneficial, reports Reuters.
The Wall Street Journal reported the White House was pressing China for more details of on how it might boost US exports and loosen regulations that stifle US firms there.
MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.2 per cent, but was still down 16 per cent for the year. E-Mini future for the S&P 500 ESc1 firmed 0.68 per cent.
Japan's Nikkei was closed for a holiday having ended the year with a loss of 12 per cent.
Across the region, the worst performer of the year was the index of Chinese blue chips which lost a quarter of its value.
The only major market in the black for the year was India, where the BSE .BSESN was ahead by almost 6.0 per cent.
The story was much the same across the globe, with the vast majority of the major stock indices in the red.
The S&P 500 is off almost 10 per cent for December, its worst month since February 2009. That left it down 15 per cent for the quarter and 7.0 per cent for the year.
The Treasury market clearly thinks the Fed is done on hikes, with yields on two-year paper US2YT=RR having fallen to just 2.52 per cent from a peak of 2.977 per cent in November.
The $15.5 trillion market is heading to its biggest monthly rally in 2-1/2 years, according to an index compiled by Bloomberg and Barclays.
The precipitous drop in yields has undermined the US dollar in recent weeks. Against a basket of currencies, it was on track to end December with a loss of 0.9 per cent but was still up on the year as a whole.
It has also had a tough month against the yen with a loss of 2.8 per cent, and was last trading at 110.36. However, 2018 was a pretty stable year for the pair given it spent all of it in a narrow trading range of 104.55 to 114.54.
The euro was ending the month on a firmer note at $1.1443, but still nursed losses of almost 5.0 per cent for the year to date.
That was trivial compared with the hit oil prices have taken in the last couple of months, with Brent down almost 40 percent since its peak in October.
Early Monday, the crude benchmark LCOc1 was up 30 cents at $53.51 a barrel but down 20 per cent for the year. US crude futures CLc1 nudged up 24 cents to $45.57.
Gold was ending the year on a high note after rallying almost 5.0 per cent in the past month to stand at $1,279.06 an ounce.
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