world stock markets

Relief rally in world markets ahead of Christmas holidays

The positive outlook in the equity markets was supported by the macroeconomic data announced in the US

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Investors’ risk appetite was high on Thursday (Dec. 23) while the transaction volume was low in the world stock markets as trading desks wind down for the Christmas break.

European stocks finished Thursday’s session with strong gains. The pan-European Stoxx 600 index closed up 1.0%, with travel and leisure climbing 1.7% to lead the gains. The German DAX Index jumped by 1%, the French CAC 40 Index climbed by 0.8% and the U.K.’s FTSE 100 Index added 0.4%

On a light day on the economic front, preliminary data from Destatis showed that Germany’s import prices rose in November at the fastest pace in nearly five decades.

The import price index rose 24.7% year-on-year following a 21.7% increase in October. Economists had forecast a score of 22.3%. The pace of increase was the fastest since October 1974.

ASIA/PACIFIC

Asian stocks also firmed up amid light trading activity. In China, the benchmark Shanghai Composite index closed up 0.57% to 3,643.34 while the Shenzhen component climbed 0.491% to 14,863.93

Hong Kong’s Hang Seng Index advanced 91.31 points, or 0.4% to settle at 23,193.64. In Japan, shares rose with the Nikkei 225 index adding 236.16 points, or 0.8%, to 28,798.37, marking its third straight session of gains.

In South Korea, stocks also rose for a third straight session, led by gains by tech and auto stocks. Seoul’s Kospi index climbed 13.69 points, or 0.5 percent, to 2,998.17. Australian markets also rose for a third straight session. The benchmark S&P/ASX 200 Index climbed 22.80 points, or 0.31%, to 7,387.60, marking the highest close in two weeks. MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.8%.

U.S.

In the U.S.,  stocks are posting strong gains for third straight day. Since Monday, the Dow Jones Industrial Average has risen 1.7% and the S&P 500 has popped 2.2%. The tech-heavy Nasdaq Composite has rallied 2.8% this week.

“Much of the stock market’s rally this week is due to overdone fears last week and a palpable sigh of relief the selling finally stopped,” Jim Paulsen, Leuthold Group chief investment strategist told CNBC. “Once the market turned higher, dip-buyers not wanting to miss out on a Santa Rally have taken charge.”

Economic data out Thursday morning showed a strong economy with improving U.S. labor and spending trends, but inflation at uncomfortable levels. Jobless claims for the week ended December 18 were unchanged from the previous week’s revised level of 205,000.

Meanwhile, the consumer sentiment index for December was upwardly revised to 70.6 from the preliminary reading of 70.4. The revised reading is even further above the ten-year low of 67.4 seen in November.

A separate report released by the Commerce Department showed durable goods for November rose 2.5%, compared to the 1.5% Dow Jones estimate.

New home sales rose 12.4% month-on-month in November to an annual rate of 744,000 units, a seven-month high.

But on the inflation side, the closely watched core personal consumption expenditures (CPE) index (a reading said to be preferred by the Federal Reserve) accelerated to 4.7% year-over-year in November from 4.2% in October and higher than the 4.5% rate expected.

On Friday (Dec. 24), there will be no transactions in the markets of many countries, especially the US, Germany, and England, due to the Christmas holiday.