Stocks face subdued Christmas Eve trading

LONDON — Asian and European stock markets turned flat in quiet Christmas Eve trade on Tuesday, running out of fizz before the festive break despite fresh record gains on Wall Street overnight.

In holiday-shortened deals, London’s benchmark FTSE 100 shares index rose 0.1 per cent to end at 7,632.24 points, while the Paris CAC 40 finished flat at 6,029.55 points.

“In true Christmas tradition, financial markets saw low trading volumes and volatility,” said CMC Markets analyst David Madden.

Frankfurt’s DAX 30 had already shut for Christmas on Monday, closing down 0.1 per cent at 13,300.98 points.

Trading volumes are typically light at this stage with many investors away for extended Christmas and New Year holiday celebrations.

Investors were pausing for breath after a bumper run over the last two weeks or so.

Global equities have already enjoyed a “Santa Rally” as dealers welcomed news over the US-China trade war and Brexit, having been on a roller-coaster ride for the last 12 months.

Britain’s pro-Brexit Prime Minister Boris Johnson won a landslide election on December 12, boosting investor sentiment. 

Last week, Johnson clinched parliamentary approval for the nation to depart from the European Union on January 31, dispelling Brexit uncertainty that had plagued markets for more than three years.

The rally gathered pace at widespread investor relief over the China-US trade pact, with the two economic superpowers set to sign off the deal early next month.

“The UK election result and the US-China trade deal was the Santa Rally — it’s been quiet since then,” added Madden on Tuesday.

Wall Street had enjoyed another blistering record-breaking performance overnight, buoyed by relief at burgeoning hopes over the China-US trade deal.

Oanda analyst Edward Moya added that he did not expect a repeat of last year’s losses the day before Christmas.

Markets had been hammered in 2018 by tighter monetary policy — from both the US Federal Reserve and also the European Central Bank.

“This Christmas Eve will not mimic last year, when we saw US stocks collapse with the S&P 500 falling into bear market territory,” Moya said. 

“This holiday period should be rather calm as trade updates appear very constructive as we near the finalisation of the phase-one trade deal next month.

“The reason we won’t see a repeat of last year is because there are no fears of any of the major central banks tightening policy anytime soon.”

Asian markets were mixed in thin business on Tuesday as Wall Street failed to spur another rally, while many bourses also closed early ahead of the holiday.