Global markets kick off the new year on lackluster note
Stocks slipped on the first trading day of 2024, but oil prices rose 2% on escalating tensions in the Middle East and bitcoin got another bump to trade above $45,000.
The S&P 500 fell 0.6% and the Nasdaq Composite shed 1.6%. The blue-chip Dow Jones Industrial Average closed slightly higher. Investors are looking to the December US jobs report due on Friday for signs that the labor market is continuing to cool.
Shares of Apple fell 3.6% on Tuesday following a downgrade from Barclays, dragging down tech stocks and the broader US stock market.
Europe’s benchmark Stoxx Europe 600 index fell 0.1% on Tuesday after rising in early trading. Markets in Asia ended m ixed. Hong Kong’s Hang Seng fell 1.5%, while mainland China’s Shanghai Composite closed down 0.4%, after weak manufacturing data. South Korean and Australian stocks rose.
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.
The S&P 500 ended the year 24% higher, the Dow gained 14% and the Nasdaq Composite jumped 43%. Global stocks had their best year since 2019.
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.
Global oil prices fell on Tuesday, reversing earlier gains 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 sank three boats manned by Iran-backed Houthi rebels that had targeted a Maersk vessel. The shipping giant said Tuesday it would suspend shipping through the Red Sea and Suez Canal “until further notice” as it continues to review security.
Oil prices fell Tuesday mid-day after jumping earlier in the day. Brent crude futures, the global oil benchmark, settled at $75.89 a barrel. West Texas Intermediate, the US benchmark, settled at $70.38 a barrel.
Bitcoin bounces back
Investors appear newly keen to place bets on risky asset bitcoin.
The world’s most valuable cryptocurrency on Tuesday topped $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.
Krystal Hur contributed reporting.
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