SYDNEY/LONDON, Dec 30 — European shares hit record highs on Tuesday after a subdued session in Asia as investors counted bumper gains heading into year-end, while silver and gold found their footing after a sharp pullback from record highs took some froth off the precious metals' searing rally.
European stock markets bumped higher, pushing the pan-European STOXX 600 benchmark index to a fresh peak. United States (US) stocks seemed set to extend a decline from last week's highs.
Oil prices held their overnight gains as Russia accused Ukraine of attacking President Vladimir Putin's residence. While Moscow provided no evidence for its claims, it nevertheless represents a setback for US efforts to broker a peace deal.
Also adding to global geopolitical tensions, President Donald Trump said he could support another major strike on Iran. China launched 10 hours of live-firing exercises around Taiwan on Tuesday.
Liquidity across most markets remained thin during a holiday-shortened week, exacerbating volatile price swings in silver and other precious metals overnight. After hitting a new record of about US$84 per ounce, silver slumped 8.7 per cent in the most significant one-day fall since August 2020, bringing gold and copper down with it.
The white metal bounced 2.5 per cent on Tuesday to US$74.1 per ounce and was still on track for a staggering annual gain of 156 per cent. Gold also gained 0.7 per cent to US$4,361 per ounce, after tumbling 4.4 per cent overnight.
Sydney-based IG analyst Tony Sycamore said the initial gap higher in silver was likely due to stop losses, price action, panic buying, and the Chicago Mercantile Exchange raising margin requirements. However, the move soon exhausted itself with no real buyers stepping in at those elevated levels.
"We have had a cooling in the precious metals, but I do not think this trend is over. We still got deficits.
"We still got nation stockpiling. We have got export restrictions. This generational bubble - has it finished? Not sure; jury is out with that," he said.
Europe's STOXX index was up 0.39 per cent and at record highs. MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.1 per cent and was set for an annual gain of 26.7 per cent, its best performance since 2017. Japan's Nikkei eased 0.1 per cent but was up 26 per cent for the year.
US stock futures were flat to slightly down. Overnight, Wall Street finished lower as heavyweight technology stocks retreated from last week's gains.
Still, US stocks are on course to end 2025 near record highs, having notched double-digit gains in a tumultuous year dominated by tariff wars, central bank policy and simmering geopolitical tensions.
Dollar's bad year
In the currency markets, the US dollar was steady ahead of the minutes of the US Federal Reserve's December meeting, which are expected to showcase a divided central bank unsure of its policy path next year. The dollar index is on track for an annual decline of almost 10 per cent, its steepest in eight years.
The yen hovered at 155.85 per dollar, some distance away from the 158-160 area that could trigger intervention from Japanese authorities. The euro was at US$1.1775, on course for an impressive gain of 13.7 per cent this year.
Rate cuts in the US and prospects of more next year have weighed on the US dollar and helped Treasuries rally, especially at the short end. Two-year yields slipped one basis point to 3.4586 per cent, down for a fourth straight session. For the year, they are down almost 80 basis points.
The 10-year yield is set for an annual drop of 46 bps.
Oil prices held largely steady on Tuesday after gaining over two per cent overnight. Brent crude futures were flat at US$61.92 a barrel, having jumped 2.1 per cent on Monday, while U.S. West Texas Intermediate crude was off 0.1 per cent at US$58.01 a barrel.
