And finally, Wall Street has closed a little higher, but with plenty of jitters around.

The Dow gained 83 points, or 0.35%, to 23,675 -- only a small recovery from its 2% losses on Monday, and last Friday.

Global growth worries, as reflected in the oil price’s drop to a 15-month low, abounded.

Investors are also edgy about what the US Federal Reserve will announce tomorrow, at its final policy meeting of the year.

Trump’s latest blast towards the Fed has only intensified the pressure, as the central bank tries to normalise policy without choking off growth. A tricky task, with Wall Street suffering one of its worst December’s ever....

Goodnight! GW

Get caught up on the markets:

The US stock market is clinging onto its gains, with the S&P 500 still up almost 1% today.

Oil, though, continues to wallow at 15-month lows as traders anticipate weak demand in 2019.

Stock market analyst Ronnie Chopra suspects that some UK companies are now vulnerable to a takeover bid, following recent stock market losses....

The Brent crude oil price has also slumped to its lowest level in over a year.

Brent, sourced from the North Sea, is down almost 4% at $57.28, the lowest since October 2018.

Despite today’s small recovery, this month is turning into one of the worst December’s in Wall Street’s history.

Indeed, Reuters has calculated that it could be the worst December since the Great Depression....

Back in London, the FTSE 100 is falling close to a two-year low.

The blue-chip index is now down 52 points, or 0.75%, at 6,721. That’s less than 20 points away from the 25-month low struck earlier this month.

Although Wall Street is still up, a 1% rise isn’t anything to shout about - given the Dow lost 2% on both Friday and Monday.

David Madden of CMC Markets thinks the rally lacks conviction, despite the welcome pick-up in US house-building reported today.

Equity markets have bounced back today, but the upward move hasn’t been driven by anything, and that is a little worrying, as it might just be a mixture of short covering and bargain hunting. The severe sell-off that was endured yesterday is still fresh in traders’ minds, and there is a sense that dealers want to get tomorrows Fed announcement out of the way, before formulating their next move.

For a change, there was some upbeat housing data from the US. Building permits ticked up to 1.32 million in November, which topped the forecast of 1.25 million. Keep in mind, the October reading was 1.26 million. The housing starts reading was 1.25 million, which was an improvement on the 1.21 million in October. Admittedly, these figure weren’t amazing, but they are a bright spot on a largely bleak housing figures.

The Wall Street rally is being led by consumer-focused companies including Nike (+2.4%), and Visa (+1%).

Industrial firms such as Boeing (+3.75%) and General Electric (+3.6%) are also up, as are financial stocks such as JP Morgan (+1.8%).

The dollar, meanwhile, is dipping as investors brace for the Federal Reserve meeting tomorrow night.

Fawad Razaqzada of FXTM explains:

The greenback has been undermined by growing speculation that, at best, the Federal Reserve will deliver a dovish rate hike, while there is a possibility – a small possibility, but a possibility nonetheless – that it could even hold off hiking altogether.

Most sectors of the US stock market are up, as traders try to shake off the pessimism gripping the markets.

Bank share are rallying, after several tough weeks.

But still, the overall picture is gloomy:

Ding Ding! Wall Street is open, and shares are trying to recover after yesterday’s rout.

The Dow Jones industrial average has gained 197 points at the open, or 0.85%.

The broader S&P 500 has gained 0.75%, after hitting a 14-month low yesterday.

The Nasdaq index, focused on tech stocks, has gained almost 1%.

Economist Ian Shepherdson makes a good point about the US housing stats:

Here’s CNBC’s take:

Investors are fleeing stocks and buying bonds in record numbers amid the global sell-off in equities, according to a December survey of fund managers released on Tuesday.

“Investors are approaching extreme bearishness ... this month’s survey [found] the biggest ever one-month rotation into the asset class” of bonds, Bank of America Merrill Lynch said in the survey. The research report is one of the most widely-followed surveys of investors on Wall Street.

Phew! After two days of serious losses, Wall Street is expected to rally when trading begins in 80 minutes time.

The Dow is predicted to rise by over 200 points, having shed more than 500 on Monday.

The Financial Times (PAYWALL) is concerned by BAML’s survey of investor confidence, showing they are the gloomiest since 2008.

Their Adam Samson writes:

Investors have made the largest-ever shift into bonds this month, according to a widely-watched survey that also showed bets on global equities falling to the lowest in two years as concern over the economic outlook increases.

Global investors’ net underweight position in bonds tumbled 23 percentage points in December to 35%, according to data released on Tuesday by Bank of America Merrill Lynch.

It was the biggest change in the history of the survey and brings the underweight position to the lowest level since the Brexit vote in June 2016.

BAML’s Michael Hartnett is also anxious, saying:

“Investors are close to extreme bearishness.”

Aviva Investors are also gloomy.

Michael Grady, their chief economist, has predict that risk assets will give weaker returns in 2019, as global growth moderates.

He writes:

“In a slowing growth environment, investors tend to focus more on downside risks. Although the economic backdrop continues to provide a basis for positive returns for risk assets, expectations of more moderate growth and tighter global liquidity, and the impact of those risks, justify more restrained positioning.

“We prefer to be overweight in US and emerging market equities because of the expected relative growth outperformance. Valuations in Europe look more attractive in some areas, but downside risks such as Brexit and the Italian budget continue to weigh on the outlook.

“We are moderately underweight government bonds as yields will continue to move higher on expectations that central banks will tighten policy in 2019. With spreads relatively tight by historical standards, we have a bigger underweight with regard to credit, including duration. Our preference is for European over US high yield due to its lower leverage and reduced sensitivity to oil prices. We have a slight preference for being long US dollars, with the main underweight against Australia on domestic challenges and Chinese growth risks.”

Given the recent selloff, are stocks now actually cheap? Or just low, and heading lower?

The City’s finest minds are wrestling with this question as 2019 approaches. On some measures, shares are offering plenty of value, as this charts shows:

The FTSE 100, for example, has lost 12% in 2018, meaning that many stocks are yielding more than a year ago (unless they’ve slashed their dividend, or are going to...)

Major US companies like Amazon, Apple and Facebook are offering better value than three months ago, having fallen by around 20% since September.

But... that sort of thinking is scrambled, if the world economy is really cooling -- and today’s IFO data doesn’t do much for confidence.

Back in January, investors were being criticised for holding onto cash..... but it doesn’t look such a bad call now.

Last night’s Wall Street rout dragged even more US companies into ‘bear market territory’ - more than 20% off their all-time high.

Companies suffering this grizzly fate include tech giants such as Apple, Amazon, IBM, Netflix and Facebook, as this chart from Marketwatch shows. More here.

Kit Juckes of Société Générale also blames president Xi’s speech for today’s gloom:

There’s snow on the ground and gluhwein everywhere but the Christmas spirit is absent in financial markets.

After a miserable afternoon for US equities, this morning actually started in a bright mood on the other side of the world, before President Xi’s lack of any encouragement for expectations of further reform gave markets the jitters. No white beard, no sleigh, not much bowing to external pressure…

There’s no Christmas cheer in the markets today, says Hussein Sayed, chief market strategist at FXTM:

December 2018 has so far been one of the ugliest Decembers in U.S. stock market history. The S&P 500 declined 7.8% in 10 trading days and experienced the worst two-day selloff since October.

Cheaper valuations, the U.S.-China trade truce, and dovish Fed commentary were not enough to put an end to falling stock markets. Santa Clause seems to have lost his way this year, defying hopes that stocks will rally towards the year’s end.

Instead, institutional investors appear to be pulling out, taking whatever profits they have accumulated throughout this year.

Splat! European stock markets have fallen in unison at the start of trading.

Traders are taking their cue from Wall Street; last night’s selloff continues to reverberate around the markets.

The FTSE 100 is down 52 points, or 0.7%.

David Madden of CMC Markets says growth concerns are “festering”.

US stocks sold-off yesterday as dealers were concerned about the world economy, and there is also a fear the Federal Reserve are tightening their monetary policy too fast. The S&P 500 fell to a new 2018 low, while the Russell 2000 entered a bear market.

Asian equity markets sold-off overnight on the back of the negative move on Wall Street.

Growth fears are also weighing on the oil price today.

Brent crude has dropped by almost 2% this morning, to $58.51 per barrel. That’s near November’s 14-month low.

China’s president has disappointed the markets today.

Xi Jinging launched a robust attack on other nations who demand Chines policy changes (yes you, America), in a high-profile speech marking 40 years of economic reform.

Xi declared:

“No one is in a position to dictate to the Chinese people what should or should not be done.

We must resolutely reform what should and can be changed, we must resolutely not reform what shouldn’t and can’t be changed.”

However, he didn’t match this tough talk with any firm details of new reforms to stimulate China’s economy, or open it up to competition.

My colleague Lily Yuo explains:

Xi’s speech comes as the Chinese leadership is facing criticism over slowing growth and confrontation with the US. Observers hoped his speech would lay out new directions or reforms needed to help the Chinese economy, weighed down by debt and lagging consumption, and an overly dominant state sector.

Instead, Xi stressed that the Party’s leadership and strategy up to now have been “absolutely correct.” He promised to support the state sector while continuing reforms in appropriate areas.

His remarks lacked any detail about new policies and failed to inspire confidence in Asian markets. Hong Kong and Shanghai both dropped sharply during the speech. They are now off 1% for the day while losses have deepened to 1.8% in Tokyo and more than 1% in Sydney.

More here: