European Stocks to Finish Their Worst Year since 2018

Data on Thursday showed U.S. jobless claims for the week ending December 24 rose more than expected, signalling some cooling in the economy. That boosted hopes among investors that the Federal Reserve's rate hikes will ease. The U.S. central bank's aggressive campaign against inflation had sparked fears of a recession as higher borrowing costs slow down the economy. Boosted by that optimism, the three main indexes on Wall Street ended higher on Thursday, and Asia-Pacific markets followed suit.

Commoditywise, crude oil prices edged higher this last trading session of the year, bouncing after the previous session’s losses, on course to end the year with modest gains. According to data from the Energy Information Administration, released on Thursday, the U.S. crude oil inventories rose by a modest 718,000 barrels last week. The increase came as something of a surprise after the industry body American Petroleum Institute had reported a drop of 1.3 million barrels in the previous day.

By 11:00 a.m. CET, U.S. WTI futures traded 0.6% lower at $78.39 a barrel, while the Brent contract lost 0.26% to $83.51/bbl.

European stocks across the European continent posted losses at the start of 2022's last session being on course for their worst year since 2018, with the pan-European Stoxx 600 index set to drop around 12% this year, its worst performance since a 13% annual decline in 2018.

The previous year was marked by monetary policy tightening from all central banks in the western world, which came in response to record inflation and the newly emerging recession risks that are expected to extend into the next year. The European Central Bank has recently stressed it intends to keep raising interest rates in the near term, continuing its fight against inflation near record levels. This will most certainly cause the Eurozone heading into a downturn early in 2023, while the Bank of England has already said the U.K. economy is in what it has projected to be a prolonged recession.

Meanwhile, at the time of writing, the German DAX declined 0.76%, while the British FTSE 100 lost 0.26%, and the French CAC 40 edged higher by 0.83%. The European Stoxx 600 index dropped 0.55% at the same time.

Asian equities followed Wall Street higher earlier this morning following encouraging U.S. employment data, but were poised for double-digit, in percentage terms, losses for the year. Hong Kong edged higher nearly 0.2% to the close, while Shanghai Composite advanced by 0.51% and Tokyo, Sydney, and Taipei were also up in late trade. Trading volumes have been expectedly thin, with investors in a low-risk mode to carry forward their holdings into new year’s markets.