Stock markets wrapped up their worst performances in years this evening before heading into 2023 under recession fears following Russia's invasion of Ukraine, high inflation and rising interest rates.
European indices closed their final sessions of the year in the red. For the year, Frankfurt was down more than 12% and Paris lost 9.5% for their worst performances since 2018.
London, however, was up 0.9% in 2022 as the energy sector was buoyed by soaring energy prices.
US stocks also closed out 2022 lower tonight, capping a year of sharp losses driven by aggressive interest rate hikes to curb inflation, recession fears, the Russia-Ukraine war and rising concerns over Covid cases in China.
Wall Street's three main indexes booked their first yearly drop since 2018 as an era of loose monetary policy ended with the Federal Reserve's fastest pace of rate hikes since the 1980s.
The benchmark S&P 500 has shed 19.4% this year, marking a roughly $8 trillion decline in market cap. The tech-heavy Nasdaq is down 33.1%, while the Dow Jones has fallen 8.9%.
The annual percentage declines for all three indexes were the biggest since the 2008 financial crisis, largely driven by a rout in growth shares as concerns over Fed's rapid interest rate hikes boost US Treasury yields.
The Dow Jones fell 73 points (0.2%) to end at 33,147 tonight, while the S&P 500 lost nine points (0.25%) to finish at 3,839 and the Nasdaq Composite dropped 11 points (0.1%) to close at 10,466.
Global equities were slammed as the US Federal Reserve, the European Central Bank and the Bank of England aggressively lifted interest rates in a bid to tackle rampant consumer price rises. The move carries the risk of sparking recession as higher borrowing costs slow economic activity.
US tech companies were hit particularly hard as they are usually boosted by lower interest rates.
The MCSI World Equity Index has lost almost a fifth in its worst annual performance since 2008, when markets were ravaged by the global financial crisis.
Asia-Pacific markets finished their last sessions mostly in the green today. But for the year, Hong Kong tanked 15.5% and Shanghai dived 15.1% in the biggest annual slumps since 2011 and 2018, respectively.
Covid spiked once more in China in December after Beijing relaxed its strict curbs in the face of rare public outcry. That also prompted worries about the impact on stretched global supply chains.
Tokyo plunged 9.4% in the first annual fall since 2018 but the Bank of Japan maintained its ultra-easy monetary policy, in contrast with other central banks, to help its fragile economy.
"It's shaping up to be a pitiful end to a miserable year in stock markets," OANDA trading platform analyst Craig Erlam told AFP.
He said 2022 had "brought an end to an era" of low interest rates that fuelled tech and crypto booms.
"That's been replaced with soaring inflation and interest rates, immense economic uncertainty and the reshaping of energy markets in the aftermath of the Russian invasion of Ukraine," Erlam said.
In commodities, oil prices rallied in 2022 with Brent gaining 7.5% and New York crude adding 4.2%.
However, they remain 40% below peaks struck in March on supply woes after key producer Russia invaded its neighbour, sending natural gas prices also spiking.
Britain and other major economies now face the likely prospect of grim recessions next year, as consumers and businesses battle rampant inflation and rising rates after years of ultra-low borrowing costs.
"The most important take of the year is: the era of easy money ended, and ended for good," noted SwissQuote analyst Ipek Ozkardeskaya.
"And given that there is still plenty of cheap central bank liquidity waiting to be pulled back, the situation may not get better before it gets worse," she said.
"Recession, inflation, stagflation will likely dominate headlines next year."
London was down 0.8% lower and Frankfurt shed 1% in half-day sessions ahead of the New Year holiday. Paris closed 1.5% lower. The Dublin market closed with losses of 0.9% this evening.
"It would appear that people have checked out for the year - and have settled back into holiday mode for New Year celebrations," Erlam said.