Stocks set for best year since 2013, dollar fades

LONDON – Global stocks looked set to close a tumultuous year with the biggest gain since 2013, powered by a rally in the U.S. that offset annual declines in Europe and Japan. A spike in the euro trimmed the dollar’s fourth straight yearly advance, while Brent crude looked to break a three-year slide.

The S&P 500 Index edged higher Friday, pushing its gain in 2016 to 10 percent. The Dow Jones Industrial Average was poised to finish the year below 20,000 after closing within 30 points earlier in the week. Equity trading remained thin during the holiday period, with volumes in Europe about 50 percent below the 30-day average at this time of day. A rapid surge in the euro disturbed the calm during the Asian morning, as a rush of computer-generated orders caught traders off guard. That sent a measure of the dollar lower for a second day, trimming its rally this year below 3 percent.

The year for financial assets began on a sour note, with the MSCI World gauge tumbling 2 percent on the first day and U.S. equities notching the worst-ever start to a year. China-fueled turmoil sent stock markets from Tokyo to India into bear markets in the first two months of 2016. Oil reached a 13-year low while the dollar slid to its weakest level in a year — all before June. The second half of the year saw much of that action reverse, as financial markets powered past the Brexit shock while Donald Trump’s presidential victory provided an unexpected boost to riskier assets.

“2016 was perhaps one of the biggest roller-coasters driven by political events,” said Dmitri Petrov, a strategist at Nomura International PLC in London. “It’s not so much the actual realized volatility of asset markets, but volatility of market view around the global macro and policy outlook that made it exceptional.”

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