News ID: 236286
Published: 1015 GMT December 23, 2018

Global markets are desperate for some Christmas spirit after a dismal year

Global markets are desperate for some Christmas spirit after a dismal year

Investors are entering the Christmas holidays hoping for some respite from a brutal few months in which stock markets have sold off across the world, with little sign of the customary ‘Santa rally’ in December.

The UK’s FTSE 100 is on track for its worst performance in a decade in 2018 – barring dramatic moves in the three days of trading left on the London Stock Exchange, including half days on Christmas Eve and New Year’s Eve, reported.

At Friday’s close London’s blue-chip index had lost more than 12 percent for the year to date, which would equate to the worst run over a calendar year since the global financial crisis hit in 2008.

If investors are mostly taking a break, there will be no let-up for retailers in their most critical period. The high street has suffered a painful year, caught in a pincer movement between the fundamental shift to online and weakness in consumer spending that many economists have blamed on Brexit-affected inflation and increased uncertainty.

Fashion brand Superdry is on course to be the FTSE 350’s worst performer of the year, with shares down by more than 70 percent, while the market value of shopping Centre owner Intu Properties was down by half.

After this weekend’s crucial Christmas trading, analysts’ eyes will turn to early footfall figures for the last days of 2018, with under-pressure chains such as Debenhams or home furnishings retailer Carpetright likely to face intense scrutiny.

It’s not only retailers in the firing line from weak consumer spending: the housing market will come under scrutiny on Friday in an otherwise unsurprisingly empty week for British economic data.

UK Finance, the banking industry body, will publish its update for mortgage lending in November, after a short Christmas truce in Brexit political wrangling. Recent data has pointed to a weakening housing market, with fewer consumers willing to commit to the biggest of big-ticket purchases as the date of the UK’s departure from the EU approaches.

For all the understandable focus on Brexit in the UK, investors across the world have endured a nervous end to the year.

Benchmark markets in Germany, Italy and France have sustained double-digit declines for the year so far. Across the Atlantic in the US, major companies listed on the S&P 500 index have shared the pain: the benchmark index lost 9.6 percent in the year to Friday.

Concerns are mounting that the business cycle is coming to an end, after enriching investors in financial markets over a placid few years. As investors approach 2019, many believe the run of strong growth and benign markets is over.

“Recent market volatility and softening in macroeconomic data suggest that the recovery has plateaued,” wrote economists at Deutsche Bank in their outlook for the year.

“Markets are increasingly sensitive, with accidents and volatility inevitable.”

The US Federal Reserve seemed unconcerned last week. Its chair, Jerome Powell, announcing the fourth interest rate rise of the year. Markets were spooked by the prospect of the central bank ploughing on with higher borrowing costs even as a slowdown loomed.

“As the monetary easing which has supported markets over the last decade continues to be slowly removed, some of the tailwinds for equities are likely to diminish,” said Peter Dixon, senior economist at Commerzbank.

“Periodic bouts of market volatility can be expected to emerge in a market environment which is likely to remain on edge.”




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