World stocks set at record highs ahead of holiday break

Milan/Sydney — World stocks stalled near record highs and currency markets were little changed on Monday as trading dwindled before the holidays and investors took profit on gains made this month.

The pan-European Stoxx 600 index was down 0.14% by 8.51am GMT, after nearing a record high in the previous session. MSCI’s broadest index of Asia-Pacific shares excluding Japan was near its highest since June 2018, up 0.05%.

The MSCI all-country stock index was flat, just below Friday’s record high. It has risen nearly 3% in December as US-China trade tensions eased and confidence grew that Britain would avoid a chaotic exit from the EU. The index is up 23% so far in 2019, set for its best year since 2009.

US President Donald Trump said on Saturday that the US and China would “very shortly” sign phase one a trade agreement. It calls for the US to reduce some tariffs in exchange for China’s buying more US farm products. On Monday, China said it would lower tariffs on products ranging from frozen pork and avocado to some types of semi-conductors next year.

“The phase one agreement and UK elections have cleared up tail risks, but the market is now transcending that euphoria,” said Stephen Innes, strategist at AxiTrader. “While  phase one is already reflected in stock prices, positioning is still relatively light, and with plenty of capital yet to be deployed; markets could even push significantly higher supported by the global growth rebound.” 

On Friday, the US benchmark S&P 500 extended its record highs to seven straight sessions, its longest streak in more than two years. All three major US indices — the S&P 500, Nasdaq and Dow — gained.

Data on Friday showed US growth rose in the third quarter and the economy has probably maintained its expansion as the year ends. Consumer spending was stronger than previously reported, and there were upgrades to business spending.

During Asian business hours on Monday, Japan’s Nikkei was little changed after reaching a 14-month top last week. It was up 2.3% for the month so far.

Chinese stocks posted their worst single-day drop in six weeks, weighed down by a correction in tech shares after a state fund announced plans to cut its stakes in some chip makers.

The US personal consumption expenditure deflator for November, due on Friday, is the only major economic report this week.

In currency markets, the euro was at $1.1083, up 0.05% after slipping 0.4% last week. Sterling was at $1.3027, edging up 0.18% from Friday’s three-week low of $1.2976. It slid 2.6% last week for its worst weekly showing since October 2017. The safe-haven yen was down 0.08% at ¥109.35.

That left the dollar index at 97.604, down 0.09% against six major currencies.

In commodities, Brent crude was down 23c to $65.95 a barrel. West Texas Intermediate (WTI) crude slipped 24c to $60.2 a barrel.

Spot gold was up 0.4% at $1,484.07 an ounce.

Reuters