Asian markets mixed after S&P 500 closed its worst year since 2008

Futures for the German DAX fell 0.5%.

The US stock markets are closed on Monday for New Year’s Day.

Over the weekend, a report showed China’s manufacturing contracted for a third straight month in December, its biggest drop since February 2020, as the country grapples with a nationwide COVID-19 spike following a sudden easing of anti-epidemic measures.

A monthly purchasing managers index fell to 47.0 from 48.0 in November, according to data released Saturday by the National Bureau of Statistics. Numbers below 50 indicate a contraction in activity.

China is in the process of removing strict COVID-19 policies that hampered the production of raw materials and goods and discouraged travel. It is uncertain what impact the reopening will have on the global economy.

The minutes of the Fed meeting may give investors more insight into the next steps. The government will also release its report on vacancies on Wednesday. This is followed by a weekly update on unemployment on Thursday. The closely watched monthly employment report will be released on Friday.

Wall Street is also awaiting corporate earnings reports, which should come in around mid-January. Companies have warned investors that inflation is likely to squeeze their profits and earnings in 2023, even after raising prices on everything from food to clothing to offset inflation and help bolster their profit margins.

On Friday, US markets took more losses in quiet trading, closing the book on the benchmark S&P 500’s worst year since 2008.

The S&P 500 fell 0.3% to 3,839.50. It posted a 5.9% loss for the month of December and a 19.4% decline in 2022, or 18.1%, including dividends.

That’s only the third annual decline since the financial crisis 14 years ago and a painful turnaround for investors after the S&P 500 posted a gain of nearly 27% in 2021. All told, the index lost $8.2 trillion in value, according to S&P Dow Jones Indices.

The Dow Jones fell 0.2% on Friday to close at 33,147.25, down 8.8% for the full year. The Nasdaq fell 0.1% to 10,466.48, an annual loss of 33.1%. The Russell 2000 lost 0.3% to finish at 1,761.25.

Equities struggled throughout the year as pandemic stimulus was withdrawn and inflation put increasing pressure on consumers, fueling fears that economies could slide into recession. Central banks raised interest rates to combat high prices.

The Fed’s key lending rate was in a range of 0% to 0.25% in early 2022 and ended the year at a range of 4.25% to 4.5% after seven increases. The US Federal Reserve predicts this will reach a range of 5% to 5.25% by the end of 2023. The forecast does not call for a rate cut before 2024.

Rising interest rates prompted investors to sell the expensive stocks of tech giants like Apple and Microsoft and other companies that thrived as the economy recovered from the pandemic.

Amazon and Netflix lost about 50% of their market value. Tesla and Meta Platforms, Facebook’s parent company, each fell more than 60%, their biggest annual decline ever.

The Russian invasion of Ukraine exacerbated inflationary pressures earlier this year by making oil, gas and food commodity prices even more volatile amid existing supply chain problems. Oil closed around $80 on Friday, about $5 higher than where it started the year. But in between, oil jumped above $120, making energy stocks the only gainer of the 11 sectors in the S&P 500, up 59%.

In currency transactions, the US dollar rose from 130.89 yen to 130.93 Japanese yen. The euro fell from $1.0699 to $1.0697.

___

AP Business Writers Alex Veiga and Damian J. Troise contributed.