Stock markets were mixed on the first trading day of 2024, pausing after a robust rally last year that was fueled by bets that major central banks will soon start cutting interest rates. Bitcoin and oil prices moved up.
The benchmark Stoxx Europe 600 index in Europe was up 0.1% by 6:14 a.m. ET on Tuesday. The DAX in Germany and the CAC 40 in France both saw gains of 0.4% and 0.1%, respectively. London’s FTSE 100 was trading flat after posting gains earlier in the day.
Markets in Asia were mixed. Hong Kong’s Hang Seng fell 1.5%, while mainland China’s Shanghai Composite closed down 0.4%, after weak manufacturing data underscored the challenges facing the world’s second biggest economy. Stocks in Australia and South Korea increased.
On Wall Street, Dow futures traded 0.2% lower, while the S&P 500 ticked down 0.3%, and the tech-heavy Nasdaq slipped 0.5%, before the opening bell.
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Global equities had a fantastic year in 2023 as investors’ concerns that high interest rates would continue to pressure economies and business valuations, as they had the year before, subsided.
Falling inflation in the US, eurozone and United Kingdom has upped expectations that central banks are preparing to slash the cost of borrowing over the next few months. Investors also got excited about the potential for artificial intelligence to make big returns for companies.
Still, investors lost faith in China. A number of issues, such as a real estate crisis, poor consumer spending, and high youth unemployment, caused the economy to falter, and as a result, the nation’s blue-chip CSI 300 index dropped more than 11% during 2023. Official data released Sunday showed that manufacturing activity contracted for the third-straight month, and by more than expected, in December.
“European indices have started the year well, ignoring the weak manufacturing signals coming from Chinese PMIs and the ongoing disruption in the Red Sea and focusing on the possibility of large rate cuts in 2024,” said Quilter Investors’ Lindsay James.
Due to fresh attacks in the Red Sea, a vital waterway that facilitates the movement of fuel and goods along international trade routes, oil prices increased globally on Tuesday.
On Sunday, US helicopters sunk three boats manned by Iran-backed Houthi rebels that had targeted a Maersk vessel. The shipping giant imposed a 48-hour delay on its vessels moving through the Red Sea on Monday.
Brent crude, the global oil benchmark, jumped 2.3% to trade at nearly $79 a barrel, and West Texas Intermediate, the US benchmark, rose 2.2% to top $73 a barrel.
Bitcoin bounces back
Investors appear newly keen to place bets on risky asset bitcoin.
The world’s most valuable cryptocurrency soared more than 5% in early trade on Tuesday, topping $45,000 for the first time since April 2022 as investors increasingly expect US regulators to approve a bitcoin-focused exchange-traded fund, or spot ETF.
A spot bitcoin ETF would open up the cryptocurrency to a huge pool of traditional investors eager to have exposure to the risky, highly volatile asset without actually owning it. Bitcoin surged 156% last year, after cratering 64% in 2022, though it remains still far off the record high of $69,000 it hit in November 2021.
