Despite a turbulent year, things are settling nicely in the financial sector. Against all odds, the year is wrapping up with a surprising balance of gains & setbacks. The dollar is trading at its highest levels in a decade while crude & gold are making comebacks. Light holiday trading forced US stocks to retreat from record highs.
Even though the Dow Jones Industrial Average failed to hit 20,000 this year, it’s still on track for more growth. Currencies in Russia & New Zealand joined the dollar in a much needed rebound. Even though it has been a year full of controversies, the future still looks bright for 2017.
Surprise Rebounds Increase Year End Optimism
“Positions are being defended, not least in oil, while China worries and lower U.S. bond yields has seen gold move higher,” said Ole Hansen, the head of commodity strategy at Saxo Bank A/S in Hellerup, Denmark, said by e-mail. “Very thin market conditions ahead of year-end are making it difficult to read too much into the current movements.”
A lackluster Christmas season kept US stocks from hitting a new record. Holiday trading on crude oil, currencies & equities were all below average. Higher mortgage rates created a drop in pending home sales. This left the blue-chip equity index 30 points shy of a round number milestone. The S&P 500 Index slumped 0.4%, while the Dow fell 20 points to 19,923. In total trading was 40% below the 30 day average.
Even though the holidays were disappointing, stocks are still on track. December brought a 3% increase, putting stocks at an 11% gain in 2016. International stocks experienced the same mixed results. The Stoxx Europe 600 Index wrapped up the year with a gain & loss of less than 0.3%. Hong Kong’s Hang Seng Index also experienced a 0.8% rally. This victory was mirrored by the 1.3% gain by the Hang Seng China Enterprises Index.
Commodities are also on the rebound. Gold made a valiant comeback to $1,144.56 an ounce, rebounding from an 11 month low. OPEC’s efforts to trim crude production also came to fruition. All members & 11 outside nations agreed to trim production by 1.8 million barrels a day. This positive news caused crude futures to jump 0.7%, putting them at $54.29 a barrel.
Even though the dollar has stolen the show, plenty of other currencies are ending the year in style. The New Zealand dollar soared 0.3% to 69.11 US cents. This came on the heels of a 0.6% rally that saved the kiwi currency from a 7 month low. Gold’s rebound also fueled the South African rand’s 0.5% growth. While promising oil rebounds let Russia’s ruble raise by 0.2%.
Between Trump’s presidential victory & the passing of Brexit, 2016 has been a shocking year. Even though many experts predicted dire consequences, investors have been surprisingly resilient to these political upsets. Crude & the dollar have been on track for historic recoveries. Stocks remain at record highs, even after a week of weak holiday trading. It appears that 2017 is going to be filled with fresh potential for economic growth. Hopefully these positive possibilities outweigh the growing political madness.