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LIVE MARKETS-U.S. stocks: Closing the books on a wild 2020, almost

Thu 31st December, 2020 2:02pm
* U.S. equity index futures mixed, changes slight * Jobless claims w/e Dec 26 came in at 787k vs 833k estimate * Euro STOXX 600 index ends down ~0.3% Thurs, down ~3.8% for year * United Kingdom exits EU's orbit at midnight * Dollar ~flat; gold edges up, NYMEX crude down * US 10-Year Treasury yield ~0.94% Dec 31 - Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at U.S. STOCKS: CLOSING THE BOOKS ON A WILD 2020, ALMOST (0900 EST/1400 GMT) The S&P 500 .SPX has rallied 15.5% in 2020, putting it on track to gain for a second straight year. That said, it was one wild year. The SPX, and Dow .DJI traded in their widest ranges as a percentage of their prior year's closes since 2009. The Nasdaq .IXIC gyrated in its biggest yearly range since 1999. Indeed, the SPX had some notable swings in 2020 including a 35% collapse into its March trough, and then a more than 70% surge into December's high.*:nL1N2JA0UP*:nL1N2IO11S In any event, around 60% of SPX components are on track to finish in positive territory for the year vs around 90% in 2019. The DJI is on pace to end up 6.6% for 2020, which would be its weakest rise since a 5.5% gain in 2011. The Nasdaq is up 43.4%, which would be its best gain since a 43.9% rise in 2009. The small-cap Russell 2000 .RUT is last up 18.7% for the year. Seven of 11 major S&P 500 sectors are on track to gain for the year. Tech .SPLRCT is set to be the best performer with a 41.8% jump. Energy .SPNY is the worst performing group for the year, and with a 36.8% decline, it's on track for its biggest yearly collapse in its history.*:nL1N2JA1CO*:nL1N2JA273 FAANG stocks continued to move markets in 2020 with the NYSE FANG+TM index .NYFANG on pace to rally 103% this year. Despite its strong rise, NYFANG is actually bowing to a number of other specialty groups this year. The Renaissance IPO ETF IPO.P is up 111%, the Global X Lithium & Battery Tech ETF LIT.P is up 128%, and the WilderHill Clean Energy ETF PBW.P has rallied 205%. Bond-proxy sectors utilities .SPLRCU and real estate .SPLRCR are among the year's laggards. This even though the US 10-year Treasury yield USYT10=RR has plunged from 1.91% to 0.94%. Financials .SPSY are set to turn in a losing year with banks .SPXBK weak. The SPXBK is on track to lose about 18% in 2020. Although only joining the S&P 500 late this year, Tesla TSLA.O is on pace to be the index's best performing individual stock with a gain of 730%. Conversely, amid the pandemic, Carnival Cruise CCL.N is on track to be the biggest loser, off 57%. On the IPO front, the hotly anticipated debut of home rental firm Airbnb ABNB.O in December capped a year that paid out big for investors*:nL1N2IR00T, while SPACs (special purpose acquisition companies) raised over $78 billion, more than six times the previous record year.*:nL8N2J104Q Here are the 2020 S&P 500 sector changes through December 30: (Terence Gabriel, Lance Tupper) ***** THE YEAR THAT WAS: "EXTRAORDINARY, TURBULENT, LIKE NO OTHER..." (1229 GMT) Investors have used many adjectives to describe 2020 - "extraordinary", "turbulent", "unprecedented", "like no other", "tremendous" and even "intriguing" just to name a few - and no doubt it has been a year of excesses. Price moves been extreme in both directions, from the step falls recorded when COVID-19 pessimism reached its peak on March 23 to the powerful gains posted after vaccine breakthroughs last month injected fresh optimism that the recovery won't be derailed. New milestones that will be hard to beat have been set and asset price valuations and moves have hit unseen thresholds. Oil prices have turned negative for the first time in history, EV stocks have surged massively, and Bitcoin has engaged on a record breaking run, while bond yields have tested new subzero limits. We have already looked at some of the features that made 2020 so special. Below you can find an overview of our previous blog posts on 2020 with charts and links to the stories. EV = extreme valuation?*:nL1N2IQ0M6 Bitcoin's golden period*:nL1N2IR0WO Phoney Brexit deadlines*:nL1N2IU0P3 U.S. big tech dwarfs Europe*:nL1N2IV16E March 23 2020*:nL1N2IW19Z Black swan meets negative oil spill*:nL1N2IX1KR Subzero chill*:nL8N2IY2UY "Contrarian catastrophe"*:nL1N2J10HQ ESG goes mainstream*:nL1N2J20U9 (Danilo Masoni) ***** WHAT COULD GO WRONG IN 2021? (1055 GMT) There is a broad consensus that 2021 will be a good year for risk assets as the economy looks set for a steep vaccine-driven bounce that should translate into a big recovery for corporate profits and more stock market gains. Turbulence however cannot be ruled out as we move into January and something may still go wrong, given the already strong run from March lows that saw world stocks rise 45% and valuations reach stretched levels in some cases (Big Tech). So what could be the risks factors for next year? Here's a list, courtesy of Kevin Boscher, Chief Investment Officer of investment services group Ravenscroft: * Should the US fail to implement another effective fiscal stimulus programme * If the Fed doesn’t extend its QE programme sufficiently * If China starts to tighten policy prematurely in order to focus on reducing leverage, credit creation and excess capacity * Any escalation of US/China tensions would be unwelcome * A second risk is that the planned vaccine programme disappoints in any way * Other key risks include: The rise of political extremism, increasing hostility towards China in the West, a possible increase in business failures once government support ceases, an earlier pick-up in inflation That being said, Boscher remains optimistic . “We will likely see a recovery boom over the next year or so and that this will be a positive backdrop for equities, in particular.” he wrote in his 2021 outlook. "History has repeatedly shown that equities require three main attributes to generate favourable returns; decent growth, plentiful liquidity and reasonable valuations," he added. World stocks have added around $25 trillion of market cap from their March lows, as you see in the chart, and are set to close the year at record levels. (Danilo Masoni) ***** OPENING SNAPSHOT: YEAR-END FATIGUE (0925 GMT) Only a few bourses in Europe are open on New Year Eve and price moves in early deals suggest that after a strong Q4 run there is some year-end fatigue kicking in, especially in London where the FTSE 100 .FTSE is down 1.6%. That may be due to widened restrictions to fight a new strain of COVID-19 but the drop also comes as Britain exits the European Union's orbit at midnight for an uncertain Brexit future.*:nL4N2JA2G2 Paris .FCHI is open too, but its losses are limited to a slight -0.4% with news that the United States had raised tariffs on some EU products having a limited impact so far.*:nL1N2JA29L Trading is thin however and both bourses will close early today. This dim mood comes after markets staged in the second part of the year a spectacular recovery from the COVID-19 lows in March but that hasn't been enough for several EU bourses. The FTSE is down more than 14% this year, France's CAC is down 6.7%, Madrid's IBEX down 15% and Milan's FTSE down over 5%. The DAX is perhaps the only bright sport, up 3.5% in 2020. In the snapshot you can see YTD and daily moves. The bourses that are open today are underlined. (Danilo Masoni) ***** THE YEAR OF LIVING DANGEROUSLY (0828 GMT) "The face of London was now indeed strangely altered: I mean the whole mass of buildings, city, liberties, suburbs, Westminster, Southwark, and altogether... sorrow and sadness sat upon every face." Daniel Defoe's description of plague-hit London is eerily reminiscent of the silence in London's financial district during this year's pandemic. It's been a year most people would rather forget, with almost 2 million dead and the world economy in its worst recession in decades. But many markets rode waves of stimulus to award investors some of the best returns ever -- once they survived the March upheaval. For those who missed it, here is a link to a story by Reuters reporters Marc Jones and Ritvik Carvalho headlined Journal of a (markets) plague year*:nL1N2IY1ZG The dollar ends the year almost universally unloved -- at 2-1/2 year lows. Effectively that's a green light for risk, allowing the euro to rise above $1.23, sterling approaching $1.3650, the yuan dropping under 6.49 and an emerging currency index at the highest since April 2018. But equity markets' mood this week was dampened somewhat by signs that legislation awarding $2000-per-head stimulus checks will simply expire as a new Congress is sworn in on Sunday. The European bourses that are trading, have opened weaker while U.S. equity futures are flat. There are two major political and trade shifts ahead -- the new EU-China deal should offer rich pickings for European automakers, real estate, financial and healthcare firms. And on Jan. 1 Britain leaves the EU orbit after more than four decades. In company news, Exxon Mobil Corp XOM.N signaled that higher oil and gas prices and improved chemicals margins would aid fourth quarter results, but the gains would be overshadowed by an up to $20 billion asset write down.*:nFWN2JA04D The Bitcoin juggernaut continues as the cryptocurrency heads for $30,000 - and annual returns of almost 300%. Key developments that should provide more direction to markets on Thursday: -U.S. weekly jobless claims at 1330 GMT. -U.S. trade officials will increase tariffs on certain European Union products, including aircraft-related parts and wines from France and Germany.*:nW1N2FC00N --Chinese regulators probe Ant Group's equity investments, intensifying a crackdown on Jack Ma's empire*:nL4N2JB0WC -Vaccinated U.S. nurse contracts COVID-19, expert says Pfizer shot needed more time to work*:nL1N2JA0IT (Sujata Rao and Danilo Masoni) ***** <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ open world stocks ev bitcoin brexit deadlines tech dwarfs March 23 negative oil subzero chill contrarian cat esg ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Lance Tupper and Terence Gabriel are Reuters market analysts. The views expressed are their own)
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