Asian stock prices struggled to end up after profit-taking during Wednesday’s U.S. session caused major U.S. indices to dip. Japan’s Nikkei 225 index lost 1.3 percent on Thursday, lead by Toshiba’s ongoing declines and its additional fall of nearly 26 percent on Thursday.
U.S. Treasury yields fell overnight to two-week lows, following weaker than anticipated home sales data. The dollar was able to remain stable against the euro and the pound, it fell 0.2 percent against the yen to trade at 117.070. The dollar traded at $1.0420 against the euro, relatively unchanged, though analysts are forecasting that the pair is likely to reach parity sometime next year.
The pound neared two-month lows on Thursday, trading at $1.2229, and the dollar index was also down slightly, trading at 103.150 .DXY, still close to last year’s 14-year high.
Santa Rally Evaporates
Traders and analysts that had been expecting to ride the “Santa Rally” (which this year has coincided with the “Trump Rally”) into the New Year were largely disappointed on Wednesday as the Dow retreated from the elusive 20,000 by retreating 111 points on Wednesday. The S&P 500 fell 18 points. Stock selling towards the year’s end is not uncommon as traders are trying to rebalance their portfolios, take profits and attempt to offset their gains by selling assets at a loss, which they may then rebuy at a lower price in the new year. In the light liquidity and thin trade during the holiday season, these sales have pushed markets to churn slowly towards the finish rather than ending the year with the bang.