London, United Kingdom – Europe’s main stock markets mostly rose after Asian indices finished lower and the dollar rose Tuesday, the first trading day of the year.
Following record highs in 2023 for the likes of Paris, Frankfurt and Tokyo, investors are predicting more gains as central banks prepare a series of interest-rate cuts as inflation cools.
Oil prices rallied 2.5 percent on supply concerns after Iran dispatched a warship to the Red Sea in response to the US Navy’s destruction of three Houthi boats.
Tehran’s move comes as tensions still run high in the waterway, where the Yemeni rebels have launched attacks on several international container ships, causing some firms to stop using it.
However, a number of shipping companies have resumed transit following efforts by a US-led naval coalition to police the maritime route.
Bitcoin broke $45,000 for the first time since April 2022 on optimism that the United States would allow wider trading of the world’s biggest cryptocurrency.
“Crypto looks to be setting itself up for a big year ahead, with bitcoin rising into a fresh 21-month high on anticipation of the likely approval of the spot bitcoin ETF product that will see Wall Street finally gain a strong presence in the industry,” noted Joshua Mahony, chief market analyst at Scope Markets.
And US stocks are forecast to extend a strong run seen in late 2023.
“There remains an increasing belief that Fed rate cuts, which have bullishly marked all capital market trends in the last eight weeks, are still fully ingrained in stock market sentiment,” said SPI Asset Management’s Stephen Innes.
He added that there was a question on how investors would reconcile the difference between market expectations of 150 basis points of cuts and the Fed’s forecast of 75.
Despite the upbeat outlook on rates, Asian markets started the year with little fanfare. Hong Kong and Shanghai each extended last year’s losses.
Traders were unmoved by a speech by Chinese President Xi Jinping in which he said the economy had become “more resilient and dynamic”.
Observers warned that while Beijing has pledged a series of measures to kickstart growth, much more was needed to instill confidence, particularly regarding the property sector.
Tokyo was closed for a holiday, though investors are keeping an eye on developments in Japan a day after a huge earthquake that Prime Minister Fumio Kishida said caused “extensive” damage and numerous casualties.
All tsunami warnings from that quake were lifted on Tuesday.