New Year, same old concerns as markets open

Markets opened the year on a cautious footing as mounting tensions in the Red Sea drove oil prices higher and weak Chinese data weighed on Asian shares. 

US equity futures were little changed, while Europe’s Stoxx 600 traded 0.3% higher, buoyed by oil companies as traders awaited euro-zone manufacturing statistics. Chinese shares fell after the factory data and a speech from President Xi Jinping that flagged headwinds facing the economy.

Oil jumped after Iran dispatched a warship to the Red Sea in response to the US Navy’s sinking of three Houthi boats over the weekend, adding to pressure as ships continue to avoid the key waterway. 

Bitcoin climbed above $45,000 for the first time in almost two years as anticipation of an approval of an exchange-traded fund investing directly in the biggest token intensified.

Signs of exhaustion have emerged after a more than $8 trillion surge in the S&P 500 last year.

“With an especially rare S&P nine-week winning streak already in the books, the index into resistance near the 4,800 level, and daily and weekly overbought readings, too, these factors combine to say we should expect some type of a consolidation, correction, or pullback — something,” John Roque, technical analyst at 22V Research, wrote in a note.

Sentiment in Asia was also dented after people familiar said ASML Holding NV, which makes semiconductor manufacturing equipment, canceled shipments of some of its machines to China at the request of US President Joe Biden’s administration.

The yen weakened against all of its Group-of-10 peers in thin trading as investors monitored conditions after an earthquake in Japan on Monday. 

President Xi in his annual new year address televised Sunday pledged to strengthen economic momentum and job creation, while conceding some “enterprises had a tough time” and “people had difficulty finding jobs and meeting basic needs.” 

Despite the persisting weakness in China, some investors consider a slump of almost 60% is a signal to buy Chinese stocks. Almost a third of 417 respondents to Bloomberg’s latest Markets Live Pulse survey say they will increase their China investments over the next 12 months.

Key events this week:

• Eurozone S&P Global Eurozone Manufacturing PMI, Tuesday
• UK S&P Global UK Manufacturing PMI, Tuesday
• Germany unemployment, Wednesday
• US FOMC minutes, ISM Manufacturing, job openings, light vehicle sales, Wednesday
• Richmond Fed President Tom Barkin — an FOMC voter in 2024 — speaks, Wednesday
• China Caixin services PMI, Thursday
• Eurozone S&P Global Eurozone Services PMI, Thursday
• US initial jobless claims, ADP employment, Thursday
• Eurozone CPI, PPI, Friday
• US nonfarm payrolls/unemployment, factory orders, ISM services index, Friday
• Richmond Fed President Tom Barkin — an FOMC voter in 2024 — speaks, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.4% as of 8:19 a.m. London time
• S&P 500 futures rose 0.1%
• Nasdaq 100 futures were little changed
• Futures on the Dow Jones Industrial Average rose 0.1%
• The MSCI Asia Pacific Index fell 0.4%
• The MSCI Emerging Markets Index fell 0.6%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro fell 0.1% to $1.1029
• The Japanese yen fell 0.3% to 141.33 per dollar
• The offshore yuan fell 0.2% to 7.1368 per dollar
• The British pound rose 0.2% to $1.2751

Cryptocurrencies

• Bitcoin rose 4.9% to $45,758.51
• Ether rose 2.7% to $2,400.49

Bonds

• The yield on 10-year Treasuries advanced five basis points to 3.93%
• Germany’s 10-year yield advanced five basis points to 2.08%
• Britain’s 10-year yield advanced seven basis points to 3.61%

Commodities

• Brent crude rose 1.5% to $78.20 a barrel
• Spot gold rose 0.5% to $2,073.65 an ounce

This story was produced with the assistance of Bloomberg Automation.