Rosalind Evans
As the year 2024 unfolds, the financial markets present a mixed picture. On the opening trading day, stocks experienced a slight downturn, oil prices surged amid Middle Eastern tensions and bitcoin’s value ascended past the $45,000 mark. This dynamic shift follows a robust performance in 2023, particularly for global stocks, as fears regarding high-interest rates and their impact on economies and company valuations subsided.
The Dow Jones index started the year with a 0.4% decline, while the S&P 500 index decreased by 0.6%. The Nasdaq, known for its tech-centric portfolio, recorded a 0.9% fall. Investors now eagerly await the December US jobs report, which is anticipated to provide insights into the labour market’s trajectory.
In contrast, the Stoxx Europe 600 index initially rose before falling by 0.3% at 9.42 a.m. ET Tuesday. Asian markets showed mixed results; Hong Kong’s Hang Seng dropped by 1.5%, and China’s Shanghai Composite saw a 0.4% decrease, primarily attributed to disappointing manufacturing data. However, South Korean and Australian stocks enjoyed growth.
The previous year, 2023, marked a significant rebound for global stocks, with the S&P 500 index soaring by 24%, the Dow Jones Industrial Average gaining 14%, and the Nasdaq Composite surging by 43% – the best performance since 2019. This upturn was supported by declining inflation rates across the US, eurozone, and United Kingdom, fueling expectations of reduced borrowing costs. Additionally, the prospect of artificial intelligence generating substantial returns invigorated investor enthusiasm.
Nevertheless, China’s economic challenges, including a real estate crisis and high youth unemployment, led to an 11% decline in its blue-chip CSI 300 index. Recent data further indicated a contraction in manufacturing activity for the third consecutive month.
Oil prices witnessed a significant rise following attacks in the Red Sea, impacting the movement of goods and fuel. Brent crude and West Texas Intermediate increased by 2%, reaching $79 and $73 a barrel, although they later receded slightly.
Bitcoin’s resurgence is a highlight, soaring over 5% and crossing the $45,000 mark. This resurgence is partly driven by anticipation of US regulatory approval for a bitcoin-focused exchange-traded fund (ETF), which would attract traditional investors to the cryptocurrency without direct ownership. Despite its volatility, bitcoin surged 156% last year, a notable recovery from its 64% decline in 2022.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, comments on the growing interest in cryptocurrencies, stating, “Although it seems clear that cryptocurrencies 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.”
The early days of 2024 in the financial markets reflect a complex and evolving landscape. While stocks have taken a slight step back, the surge in oil prices and the remarkable rebound of bitcoin signal a diverse and intriguing year ahead for investors and market observers alike.
