World stock markets on Monday staggered toward the end of their worst year since the global financial crisis a decade ago, rocked by rising interest rates, a global trade dispute and Brexit, dealers said.
London and Paris wobbled in holiday-shortened trade on New Year’s Eve, but nursed dizzying double-digit annual falls after an exceptionally volatile year.
Wall Street gained in the final trading session of the year, but major indices declined for the year, with the Dow shedding 5.6 percent compared to the end of 2017.
Equities have been hammered by tighter monetary policy from the US Federal Reserve and the European Central Bank, which last month halted its quantitative easing stimulus policy.
“Global stocks are set for their worst year since the financial crisis, thanks to the tightening monetary policies,” ThinkMarkets chief market analyst Naeem Aslam said.
The Bank of England in August hiked British interest rates for the second time since the financial crisis to help tame inflation, despite worries that Brexit could wreak havoc on the economy.
Sentiment was also dented by US President Donald Trump’s “America first” trade policy, which has sparked a damaging trade dispute with China and others.
“Stock markets have been on a wild ride this year and the United States has been at the center,” Oanda Corp analyst Craig Erlam said.
“Tax reforms hugely boosted earnings, bringing an economic boost with it,” he said.
However, “the trade war with China and skirmishes elsewhere have weighed heavily on the relevant domestic markets, which has dented investor sentiment,” Erlam added.
In Europe on Monday, London’s benchmark FTSE 100 index dipped 0.1 percent to finish at 6,728.13 points, marking a sharp annual loss of 12.5 percent.
The Paris CAC 40 climbed 1.1 percent to end at 4,730.69 points — a drop of nearly 11 percent for the year.
Many investors were away for the Christmas and New Year holidays, while trading hubs including Frankfurt, Rome, Tokyo, Shanghai and Seoul were shut.
Last year “has been characterized by a shift from low volatility, high liquidity and expectations of equity out-performance to high volatility, low liquidity and the return of a bear market in equities,” VTB Capital economist Neil MacKinnon said.
“For 2019, a global economic slowdown — perhaps recession — looks increasingly likely,” he added.
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