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.
Europe’s benchmark Stoxx Europe 600 index was up 0.1%, while Germany’s DAX and France’s CAC 40 rose 0.4% and 0.1% respectively by 6.14 a.m. ET Tuesday. 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. South Korean and Australian stocks rose.
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.
2023 was a great year for global stocks as fear receded that elevated interest rates would continue to weigh on economies and company valuations, as they had the previous year.
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.
Investors soured, however, on China. The country’s blue-chip CSI 300 index fell more than 11% over 2023 as a string of problems — including a real estate crisis, weak consumer spending and high youth unemployment — put the economy on the back foot. Official data released Sunday showed that manufacturing activity contracted for the third-straight month, and by more than expected, in December.
“European indices have begun the year on a positive note, choosing to ignore the weak manufacturing signals emanating from Chinese PMIs and the ongoing disruption in the Red Sea and instead focusing on the likelihood of significant rate cuts in 2024,” Lindsay James, Investment strategist at Quilter Investors, told CNN.
Global oil prices rose on Tuesday following new attacks in the Red Sea, a key waterway allowing for the transit of goods and fuel along global trade routes.
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.
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.
“The surge of enthusiasm for crypto comes as the US Securities and Exchange Commission mulls applications for spot bitcoin ETFs,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, told CNN.
“Although it seems clear that crypto currencies are here to stay, and there is increasing appetite to add them to portfolios, the waiting game is still on for more regulated options for investors,” she added.
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