2024-01-02 07:40:00
The German DAX index on the Frankfurt Stock Exchange
by Blandine Henault
The main European stock markets are expected to rise on Tuesday at the opening of the first session of the year 2024, continuing the rally at the end of 2023 on expectations of the first rate cuts by central banks in the coming months.
Futures contracts report an increase of 0.48% for the Parisian CAC 40, 0.33% for the Dax in Frankfurt, 0.09% for the FTSE in London and 0.52% for the Stoxx 600.
In 2023, the CAC 40 climbed 16.51% and the Dax jumped 20.3%, their best annual performance since 2006. The STOXX 600 gained 12.74%, its best year since 2012, while that the FTSE gained 3.78%, its strongest annual increase since 2007.
The MSCI world equity index expressed in dollars jumped 20.09% last year, its best annual performance in ten years.
“We might see stocks continue their merry rise and we need to remain open to all possibilities,” said Chris Weston, head of research at Pepperstone, who nevertheless highlights the risks linked to reduced liquidity and signs of exuberance widespread.
Investors will be attentive this week to economic indicators which will or will not support expectations of the first reductions in interest rates by the major central banks this year, starting with the American Federal Reserve (Fed).
The final manufacturing PMI indicators in Europe for the month of December are expected in the morning, before inflation in the euro zone for December and the monthly report on American employment for the same month scheduled for Friday.
VALUES TO FOLLOW:
A WALL STREET
The New York Stock Exchange ended slightly lower on Friday to conclude a year 2023 which was also prosperous for the American indices.
The Dow Jones index lost 0.05% to 37,689.54 points, but climbed 13.7% over the whole of 2023, its best annual performance since 2006.
The S&P-500 lost 0.28% to 4,769.83 points but jumped 24.23% last year, its biggest increase in two years.
The Nasdaq Composite for its part fell 0.56% to 15,011.35 points but shows a gain of 43.4% over 2023, its best performance since 2020.
Futures contracts on the three indices are currently reporting an almost unchanged opening on Tuesday.
IN ASIA
The Tokyo Stock Exchange is closed this Tuesday due to a public holiday. Its main index, the Nikkei, gained 28.24% in 2023, its best year since 2005.
In China, stock indices fell on Tuesday following three consecutive sessions of increases.
Mainland China’s large-cap CSI 300 lost 1.3% and the Shanghai Stock Exchange Composite Index lost 0.43%. The two indices fell by 11.37% and 3.7% respectively last year amid disappointment in China’s economic growth.
According to the manufacturing PMI index calculated by Caixin/S&P Global and published on Tuesday, manufacturing activity in China accelerated in December thanks to a consolidation of production and new orders. These data contrast with the official survey published on Sunday, which indicates a greater slowdown than expected in manufacturing activity last month.
In Hong Kong, the Hang Seng fell by 1.83% following dropping 13.82% in 2023.
RATE
The yield on ten-year Treasuries increased by more than six basis points on Tuesday, to 3.9219%.
In October it reached a peak of more than 5%, the highest since 2007, before falling in the last two months of the year with the pause observed by the major central banks on their interest rates, favored by a decline in inflation, which fueled expectations of declines this year.
In Europe, the yield on the ten-year German Bund rose by almost four points, to 2.071%, following peaking at more than 3% in early October, which marked its highest since 2011.
CHANGES
The dollar, which gained 0.15% on Tuesday once morest a basket of reference currencies, saw, like American yields, a sharp decline at the end of the year. The “dollar index” lost 3% over the whole of 2023.
For its part, the euro, which moves around $1.103 on Tuesday, increased by more than 3% last year.
A sign of the continued appetite for risk, bitcoin climbed beyond $45,000 on Tuesday, for the first time since April 2022.
The most famous cryptocurrency jumped 156% last year, its best annual performance in three years, but remains far from its historic record of $69,000 reached in November 2021.
Investors remain awaiting the decision of the American stock market regulator on the possible approval of ETF index funds directly backed by bitcoin.
OIL
Crude prices climbed on Tuesday for their first session of the year, supported by fears of production disruptions in the Middle East due to tensions in the Red Sea. They are also benefiting from hopes of measures to support the economy in China, the world’s leading importing country.
A barrel of Brent from the North Sea gained 1.83% to $78.45 and that of American light crude (WTI) advanced 1.63% to $72.82.
The two benchmarks fell by 10.3% and 10.73% respectively last year, despite production reductions made by OPEC+ countries.
(Written by Blandine Hénault, with contributions from Rae Wee in Singapore)
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