Australia

The Australian sharemarket is set to rally on Friday following a positive session on Wall Street, although US shares remain on track for the worst year since the 2008 financial crisis.

ASX futures were pointing 0.8% higher to 7019 as of 8am on Friday.

The ASX 200 is 3.6% lower this month and all-but certain to lose ground in December for the first time since 2019. It is down 5.7% in 2022 and on course for its worst year since 2018.

US stocks were helped by advances in technology bellwethers as traders position for the new year, with Apple, Amazon, Meta and Microsoft, which have all posted big losses in 2022, rising over 2.5% for the day.

The S&P 500 added 1.75%, wiping out losses racked up over the prior two sessions. The technology-focused Nasdaq Composite gained 2.6% and the Dow Jones Industrial Average moved up 1.05%

In commodity markets, Brent crude oil fell 1.2% to $US82.26 a barrel, while gold rose 0.61% to US$1,815.37.

In local bond markets, the yield on Australian 2 Year government bonds dipped to 3.38% while the 10 Year was 4.02%. Overseas, the yield on 2 Year US Treasury notes edged down to 4.25% while the yield on 10 Year US Treasury notes was 4.13%.

The Australian dollar hit 67.76 US cents up from the previous close of 67.39. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, fell to 97.00.

Asia

Major indexes in Asia closed with losses. South Korea's Kospi dropped 1.9%, while Japan's Nikkei 225 declined 0.9%. Hong Kong's Hang Seng fell 0.8%, and China's Shanghai Composite edged down 0.4%.

Chinese shares closed mixed in light trading as investors tempered optimism over China's reopening, with the property and telecom sectors weighing on the market. Poly Developments & Holdings Group and China Vanke declined 2.3% each, erasing previous gains. China Mobile dropped 3.1% and China Unicom fell 2.0%. Retailers and pharmaceutical companies continued the reopening rally, offsetting some declines by developers. Chongqing Department Store climbed 4.2% and Shanghai Junshi Biosciences advanced 11%. The Shanghai Composite Index ended 0.4% lower at 3073.70.

Hong Kong stocks ended lower, pulling back from Wednesday's gains that pushed the equity market to a multiweek high. The benchmark Hang Seng Index shed 0.8% to settle at 19741.14. Electronics companies led losses, with smartphone-component maker Sunny Optical plunging 6.9% to become the index's worst performer. Smartphone company Xiaomi and personal-computer maker Lenovo fell 3.2% each. China's tech giants further weighed on the market as the sector tracked losses in growth stocks on Wall Street overnight. JD.com fell 5.4% and NetEase declined 2.9%.

Japanese stocks closed lower, dragged by retail and shipping stocks, as uncertainty continues about the global economic outlook amid high inflation. Fast Retailing fell 3.0% and major shipper Mitsui O.S.K. Lines lost 2.8%. Meanwhile, Japan Tobacco sheds 5.9% and Inpex drops 3.7% as they trade ex-dividend. The Nikkei Stock Average fell 0.9% to 26093.67.

Europe

European stocks rose in quiet trade, supported by hopes the Federal Reserve could soften its aggressive policy stance after data suggested some cooling in the US labor market.

The pan-continental Stoxx Europe 600 edged up 0.7%, Britain's FTSE 100 climbed 0.2%, the German DAX gained 0.9% and the French CAC 40 advanced 0.9%.

Britain's FTSE 100 reversed earlier losses ahead of the new year weekend. Antofagasta was the biggest faller, ending the day down 2.1% after saying that access to its Los Pelambres mine in Chile was blocked, affecting the transport of supplies and personnel to the site. Anglo American was the second biggest faller, finishing 1.0% in the red, followed by Imperial Brands, which also ended down 1.0%. Scottish Mortgage Investment Trust was the biggest gainer, ending 3.7% up, followed by Airtel Africa, which ended 2.6% higher.

North America

The S&P 500 jumped Thursday in one of the last trading sessions of the year but remained on track to close out its worst year since the 2008 financial crisis.

The broad-based stock index added 66.06 points, or 1.7%, to 3849.28, its largest one-day gain of the month. The technology-focused Nasdaq Composite gained 264.80 points, or 2.6%, to 10478.09. The Dow Jones Industrial Average added 345.09 points, or 1%, to 33220.80. US stock benchmarks had pulled back Wednesday.

The gains stretched across industries Thursday, with all 11 of the S&P 500's sectors advancing for the day. Tech stocks were among the best performers, with some recent stock-market losers outperforming the broader market.

Tesla shares, for example, shot up $9.11, or 8.1%, to $121.82. They remain down 65% for the year. Shares of Apple, Alphabet and Meta Platforms, which are headed for one of their worst years on record, also outperformed the broader market, adding at least 2.8% each.

With just one trading session left in 2022, many investors are likely to end the year nursing heavy losses. As of Thursday, the Dow industrials, S&P 500 and Nasdaq Composite were down 8.6%, 19% and 33%, respectively, this year.

"Investors desperately want to end the year on a bullish note, but I think that is pretty offsides with the facts," said Hans Olsen, chief investment officer of Fiduciary Trust Company.

Mr. Olsen said he is cautious heading into the new year, wary that higher interest rates could weigh on stock returns in the coming months.

In the last days of the year, investors are considering what China's shift away from a zero-tolerance approach to Covid-19 means for markets. On one hand, the resumption of travel in and out of China could add a boost to the global economy as growth slows.

On the other, investors worry that rising demand could boost prices for energy and other commodities, propelling central bankers to raise interest rates further to curb inflation. The spread of Covid-19 in the country could also curb production, disrupting supply chains.

"This is why we have this hot and cold market reaction," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Thursday's stock-market jump builds upon the most volatile year for the S&P 500 since the 2008 financial crisis. The broad stock-market gauge has recorded 122 daily moves of 1% or more, the most in 14 years.

The end of year also brings a sense of déjà vu. The US is concerned that the rapid spread in China of the virus that causes Covid-19 could increase the potential for new variants. Federal officials said the US will require travelers from China to submit a negative Covid-19 test beginning Jan. 5.

Many traders are off this week. That means markets are susceptible to outsize moves from fewer trades, heightening volatility.

Peter van Dooijeweert, head of multi-asset solutions at Man Solutions, said investors appear reluctant to take big risks in the market heading into the new year.

"Most people expect the first quarter to be very difficult," Mr. van Dooijeweert said. "We're going to be stuck on every data point."

Fresh data on inflation and jobs has stoked fireworks in the stock market throughout 2022, a trend Mr van Dooijeweert said he expects to persist in the new year.

In the latest read on the health of the US economy, figures released Thursday showed the number of workers filing for unemployment benefits in the week ended Dec. 24 stood at 225,000, up slightly from 216,000 the week prior.

For the most part, the long-awaited " Santa Clause Rally" hasn't yet arrived, with the S&P 500 on track for a 0.1% rise this week after some large swings. U.S. stocks tend to rise during the Santa Claus rally period - the last five trading sessions of the year and first two of the new year.