Global stocks end strong year with losses

Global stock markets closed lower Friday, the final trading session of 2021 — a year of strong gains overall as economies recovered despite ongoing restrictions caused by the coronavirus pandemic.  

On Wall Street, the broad-based S&P 500 had its best December in over a decade, and scored a third straight year of double-digit gains with a 27.1 percent jump.

The index notched records 70 times this year, “second only to 1954,” said analyst Sam Stovall. “2021 was a very good year.”

The benchmark Dow Jones Industrial Average won 18.7 percent, while high-flying tech stocks pushed the Nasdaq up 21.4 percent.

London’s benchmark FTSE 100 index fell 0.3 percent in a shortened trading session ahead of the New Year, posting an increase of 14 percent for the year.

The Paris CAC 40 index rocketed almost 29 percent this year, its best showing for more than 20 years.

Germany’s DAX had ended its year Thursday, having surged nearly 16 percent in 2021.

While markets soared in 2021, they seesawed in recent months as investors worried about resurging inflation, the prospect of an end to central bank largesse and the ongoing coronavirus pandemic.

The Federal Reserve has flagged its concerns about rising prices, and is expected to begin to raise interest rates off zero in the early months of next year after starting to draw down its stimulus bond buying program.

“As we look ahead into 2022, the questions around inflation, growth and the… pandemic remain with us, while the monetary policy outlook is clouded by the potential for more (central bank) rate hikes throughout the coming months,” noted Chris Beauchamp, chief market analyst at IG trading group. 

“Overall it still seems sensible to expect further gains for stocks, but with perhaps less of the exuberance we saw in 2021.” 

Oil prices dropped two percent Friday, having surged more than 50 percent this year on a strong rebound in crude demand after a dismal pandemic-hit 2020.

In Asia, Hong Kong’s main stocks index finished with gains Friday, on surging Chinese tech shares.

The benchmark Hang Seng Index closed up by more than one percent, on a day when many Asian bourses — Indonesia, Japan, South Korea, Taiwan and Thailand — were closed for public holidays.

The Hang Seng has been the world’s poorest-performing major gauge in 2021, down about 14 percent.

It follows a tough year for many Chinese tech giants, which have been battered by Beijing’s drive to rein in their influence.

Omicron worries

Global stocks struggled to make gains in the final week of the year as markets weighed government efforts to limit the health and economic effects of the latest fast-spreading Covid-19 wave.

The Omicron variant has led to record new infections worldwide, but markets have remained sanguine in light of research suggesting the health effects will be milder than with earlier variants.

But positive cases still mean employees must miss work, and that has reverberated, canceling events and flights during a busy travel season.

“Worries about the Omicron variant have receded, but the speed of its spread is tempering sentiment,” analysts at Charles Schwab wrote.