LONDON: Asian and European stock markets mostly fell Wednesday as traders took cash off the table after a blockbuster end to 2023, with eyes now on the release this week of US Federal Reserve minutes and jobs data.
Oil prices declined after spiking Tuesday on supply concerns linked to simmering tensions between Iran and the United States in the Red Sea.
The dollar rose against the euro and yen as dealers awaited fresh clues on the Fed’s interest-rate outlook in the upcoming minutes from its final monetary policy meeting of 2023.
“Messaging from the central bank seemed a touch confused at the end of 2023 as it initially implied rate cuts in 2024 before such talk was dampened,” noted AJ Bell investment director Russ Mould.
European shares kick off new year on dour note
The “minutes may provide some clarity”, he added.
Equities surged late last year on expectations the US central bank would slash interest rates in 2024 as inflation cools.
However, analysts have warned of an excessive rally and that investors should prepare for a pullback, with tech titans such as Apple and Amazon likely to take a hit.
“The market may have gotten ahead of itself about (rate) cuts,” said City Index analyst Fiona Cincotta.
On Wall Street Tuesday, the Nasdaq slumped 1.6 percent and the S&P 500 was also in the red, though the Dow rose slightly.
The negative mood continued in Asia Wednesday, where Hong Kong, Sydney, Seoul and Taipei were among the biggest losers.
Shanghai edged higher and Tokyo was shut for a Japanese holiday.
In Europe, Paris sank more than one percent while London and Frankfurt each shed about half a percent.
The year “has kicked off with risk retrenchment”, said Vishnu Varathan at Mizuho Bank.
“Whether this is a durable purge from excessive exuberance or merely profit-taking is unclear.”
The Fed’s post-meeting statement in December had indicated three interest rate cuts this year, though some market participants are tipping far more.
Friday sees the release of the closely watched US non-farm payrolls data.
Key figures around 1130 GMT
London - FTSE 100: DOWN 0.5 percent at 7,682.24 points
Paris - CAC 40: DOWN 1.0 percent at 7,454.78
Frankfurt - DAX: DOWN 0.6 percent at 16,671.26
EURO STOXX 50: DOWN 0.8 percent at 4,477.46
Hong Kong - Hang Seng Index: DOWN 0.9 percent at 16,646.41 (close)
Shanghai - Composite: UP 0.2 percent at 2,967.25 (close)
Tokyo - Nikkei 225: Closed for a holiday
New York - Dow: UP 0.1 percent at 37,715.04 points (close)
Euro/dollar: DOWN at $1.0936 from $1.0942 on Tuesday
Dollar/yen: UP at 142.67 yen from 141.99 yen
Pound/dollar: UP at $1.2628 from $1.2617
Euro/pound: DOWN at 86.59 pence from 86.72 pence
West Texas Intermediate: DOWN 0.5 percent at $70.06 per barrel
Brent North Sea Crude: DOWN 0.3 percent at $75.65 per barrel
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