Global markets experienced a lackluster start to the new year, with stocks slipping on the first trading day of 2024. Despite this, oil prices saw a 2% increase due to escalating tensions in the Middle East, while Bitcoin surpassed $45,000, driven by expectations of the approval of a bitcoin-focused exchange-traded fund (ETF).
In the United States, the S&P 500 fell by 0.6%, and the Nasdaq Composite dropped 1.6%, reflecting a cautious sentiment among investors. However, the Dow Jones Industrial Average managed to close slightly higher. The upcoming December US jobs report, scheduled for Friday, is eagerly awaited as investors seek insights into the trajectory of the labor market, especially in the context of cooling economic conditions.
Tech giant Apple faced a setback, with its shares declining by 3.6% following a downgrade from Barclays. This downturn had a ripple effect, dragging down other tech stocks and contributing to the broader decline in the US stock market.
Meanwhile, in Europe, the Stoxx Europe 600 index experienced a marginal 0.1% decrease after initially rising in early trading. Asian markets presented a mixed picture, with Hong Kong’s Hang Seng falling by 1.5%, the Shanghai Composite in mainland China closing down 0.4%, and South Korean and Australian stocks recording gains.
Looking back at 2023, global stocks had a remarkable year, rebounding from concerns about elevated interest rates that had plagued economies and company valuations the previous year. The S&P 500 ended the year with a 24% gain, the Dow rose by 14%, and the Nasdaq Composite surged by an impressive 43%. This marked the best performance for global stocks since 2019.
Falling inflation rates in the US, eurozone, and the United Kingdom fueled expectations that central banks would consider cutting borrowing costs in the coming months. Additionally, investor enthusiasm was sparked by the potential for artificial intelligence to generate significant returns for companies.
However, China faced headwinds in 2023, with its blue-chip CSI 300 index plummeting over 11%. A real estate crisis, weak consumer spending, and high youth unemployment contributed to the economic challenges. Official data released in December indicated a contraction in manufacturing activity for the third consecutive month.
In the realm of oil markets, prices experienced fluctuations on Tuesday. Initial gains were reversed following new attacks in the Red Sea, a vital waterway for global trade routes. US helicopters sank three boats manned by Iran-backed Houthi rebels targeting a Maersk vessel. As a result, the shipping giant announced the suspension of shipping through the Red Sea and Suez Canal “until further notice” to review security measures. Brent crude futures settled at $75.89 a barrel, while West Texas Intermediate, the US benchmark, settled at $70.38 a barrel.
On the cryptocurrency front, Bitcoin saw a resurgence, surpassing $45,000 for the first time since April 2022. Investors’ renewed interest was driven by expectations of US regulators approving a bitcoin-focused ETF, providing traditional investors with exposure to the volatile asset. Despite Bitcoin’s 156% surge in 2023, rebounding from a 64% decline in 2022, it still lags behind the record high of $69,000 reached in November 2021.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, highlighted the growing enthusiasm for cryptocurrencies. However, she emphasized the ongoing wait for more regulated options for investors as the US Securities and Exchange Commission considers applications for spot bitcoin ETFs.
