Chinese stocks and dollar were stars, oil big loser in 2014

By Rodrigo Campos

NEW YORK (Reuters) – China and the United States headed the list of 2014 top-performing equity markets among larger economies while crude oil prices closed in the red to cap a massive yearly slump.

The U.S. dollar on Wednesday added slightly to gains that have made it the year’s star major currency.

On Wall Street, stocks fell on Wednesday but the S&P 500 closed 2014 near its record high. The index hit records in more than 50 sessions throughout the year.

“Markets put in a solid year in spite of significant headwinds that could have easily derailed a multi-year bull market,” said Peter Kenny, chief market strategist at Clearpool Group in New York. “The most the bears got out of this year was a 10 percent correction on an intraday basis, and the markets stubbornly moved higher, and for good foundational reasons.”

The S&P 500 ended its third straight year of double-digit percentage gains. The benchmark added 11.4 percent this year. The Dow Jones industrial average gained 7.5 percent, and the Nasdaq Composite gained 13.4 percent for the year.

On a total return basis, the S&P 500 gained 13.7 percent this year.

On the day, the Dow fell 160 points, or 0.89 percent, to 17,823.07, the S&P 500 lost 21.45 points, or 1.03 percent, to 2,058.9 and the Nasdaq Composite dropped 41.39 points, or 0.87 percent, to 4,736.05.

In Latin America, Argentina’s benchmark stock index added 59 percent in 2014 and Brazil’s Bovespa shed nearly 3 percent. Colombia’s IGBC fell 11 percent and Mexico’s IPC was little changed, up less than 1 percent.

The stand-out equity performer among top economies this year was China, where the CSI300 index ended 2014 with gains of near 52 percent. The index added more than 25 percent in December alone, its best month since April 2007, in part as foreigners won wider access to Chinese stocks.

“China stocks have done really well this year and the dollar move has also been very interesting,” said Alvin Tan, an FX strategist at Societe Generale in London. “It barely moved against the other major currencies in the first (half) of the year and all the big gains came in the second.”

The dollar ended 2014 up 12.8 percent against a basket of major currencies, its best performance since 1997. An expected start to a Federal Reserve tightening cycle may strengthen the dollar’s appeal in the new year.

The euro, undermined by bets that the European Central Bank will have to start buying government bonds to avert deflation, was down 0.5 percent at $1.2098, having touched a 2-1/2-year low of $1.2095.

The Russian rouble was down 5 percent on the day as a more than 76 percent plunge for the year marked its worst performance since Russia defaulted in 1998. [EMRG/FRX]

The young bitcoin currency is closing the year only slightly better than the rouble, falling 57 percent at about $318. It peaked at $995 last January.

U.S. government debt that matures in 20 years and beyond booked a 27 percent return, according to Barclays. That would be its biggest annual gain since 2011, when it generated a 33 percent return.

On its last session of the year, the benchmark 10-year U.S. Treasury note was up 6/32, the yield at 2.1703 percent.

Crude oil prices, already down by half from this year’s peak, slumped again on Wednesday. Brent fell as much as 3.7 percent to trade below $56 a barrel and U.S. crude was down 3 percent at its session low. Weak Chinese manufacturing data and demand concerns weighed on prices.

Brent was last down 0.6 percent at $57.55 a barrel and WTI fell 0.6 percent to $53.80 a barrel. For the year Brent is down 48 percent and WTI is down 46 percent. [O/R]

Copper, of which China is the biggest consumer, looked set to post its biggest annual decline in three years at 14.4 percent, while traditional safe-haven gold was to close the year just shy of 2 percent lower. Silver fell 19.4 percent in 2014 after a more than 35 percent drop in 2013.[GOL/]

(Additional reporting by global financial markets teams; Editing by Dan Grebler, Leslie Adler and Meredith Mazzilli)

Chinese stocks and dollar were stars, oil big loser in 2014