Market Insights for 2024: A Look into Stocks, Bitcoin, and Oil
Stocks dip, oil surges amid Middle East tensions while bitcoin continues its upward trajectory above $45,000
Stocks on the first trading day of 2024 slipped, but oil prices increased by 2% due to escalating tensions in the Middle East. Bitcoin also saw a rise, trading above $45,000. The Stoxx Europe 600 index initially rose, but later fell 0.5% by 7:54 a.m. ET on Tuesday. In Asia, markets had mixed results, with Hong Kong's Hang Seng falling 1.5% and mainland China's Shanghai Composite closing down 0.4% after weak manufacturing data. However, South Korean and Australian stocks experienced gains.
On Wall Street, Dow futures were trading 0.6% lower. S&P 500 futures dropped 0.8%, and the tech-heavy Nasdaq fell 1.1%.
Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., December 15, 2023.
Brendan McDermid/Reuters
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Decreasing inflation in the US, eurozone, and United Kingdom has raised expectations that central banks are preparing to reduce borrowing costs in the coming months. Additionally, investors are optimistic about the potential for artificial intelligence to generate significant returns for companies.
Conversely, investors have turned negative towards China. The country's blue-chip CSI 300 index dropped by over 11% in 2023 due to various issues including a real estate crisis, weak consumer spending, and high youth unemployment, which have adversely impacted the economy. Official data released on Sunday indicated that manufacturing activity contracted for the third consecutive month in December, surpassing initial expectations.
The Red Sea saw a surge in global oil prices on Tuesday due to recent attacks, which occurred in the key waterway where goods and fuel are transported along major trade routes.
Iran-backed Houthi rebels targeted a Maersk vessel on Sunday, prompting US helicopters to sink three boats. As a result, the shipping company enforced a 48-hour delay for its vessels transiting through the Red Sea on Monday.
Brent crude, the global oil benchmark, and West Texas Intermediate, the US benchmark, both jumped 2% to trade at $79 and $73 a barrel respectively.
Bitcoin bounces back
Investors are showing renewed interest in investing in the volatile asset of bitcoin.
The world's most valuable cryptocurrency surged by over 5% in early trading on Tuesday, surpassing $45,000 for the first time since April 2022. This comes as investors grow more confident in the potential approval of a bitcoin-focused exchange-traded fund (ETF) by US regulators.
A spot bitcoin ETF could potentially broaden cryptocurrency access to a large group of conventional investors looking to invest in the highly volatile asset without directly owning it. Bitcoin saw a 156% surge last year, following a 64% drop in 2022, but still remains significantly below its record high of $69,000 achieved in November 2021.
"The growing interest in cryptocurrency coincides with the US Securities and Exchange Commission's consideration of spot bitcoin ETF applications," said Susannah Streeter, head of money and markets at Hargreaves Lansdown, in an interview with CNN.
She added that while it appears evident that cryptocurrencies are a permanent fixture in the financial landscape and that there is growing interest in including them in investment portfolios, investors are still waiting for more regulated options.
