Global Stock Market Slump: A Downbeat Start to 2024

 

Global Stock Market Weekly Analysis (2- 5 Jan 2024)

 

Global stock market indexes ended lower during the holiday-shortened week. The markets were closed on 1st January in observance of a New Year holiday. The market volume was muted in the first half of the week as most traders were in a holiday mood, while in the second half, economic data was in focus. The equity benchmarks in the US, Europe, and Asian markets closed in the red in the first week of 2024.

 

The US Stock Markets – Weekly Updates

 

The US stock market indexes closed lower for the first trading week of 2024, snapping the nine-week winning streak. Among the major three indexes, the tech-heavy Nasdaq fell the most this week followed by S&P 500 and Dow Jones Industrial Average (DJIA). A sharp fall in Apple shares following a downgrade by Barclays weighed on the index initially. 

The Geopolitical concerns also hit the market sentiments as the 2024 trading began. The tension between Taiwan and China ahead of the upcoming election and the surge in crude oil prices due to Houthi attacks in the Red Sea dented market sentiments during the week.

The last week’s economic data painted a mixed picture of the economy. On Tuesday the S&P Global released the manufacturing PMI, indicating a fastest pace of contraction since August. However, the ISM data on Wednesday showed factory activity picking up more than expected in the month.

The week’s closely watched monthly nonfarm payroll report showed that US employers added 216,000 jobs in December, well above consensus forecasts. Meanwhile, the monthly growth in average hourly earnings remained steady at 0.4%, slightly above expectations. Additionally, the unemployment rate defied expectations, maintaining at 3.7%. 

The monthly payroll data came above expectations, while earlier this week the JOLT’s job opening fell to an almost 2-year low.  The US ISM Services PMI fell substantially in December as the employment rate slipped to its lowest level in three and half years. 

The strong job data released on Friday spiked the US Treasury yields. The 10-year Treasury yield climbed to 4.046%, last Friday it was settled at 3.881%

 

European Stock Market Indexes- Weekly Updates

 

European stock market indexes ended lower this week, snapping a seven-week winning streak, as optimism for an early interest rate cut in 2024 faded away. The major European stock market indexes, CAC, DAX, FTSE MIB, and UK’s FTSE all closed in the red in the first week of 2024.

The surge in eurozone inflation in December seemed to reduce the expectation of the European Central Bank (ECB) implementing early rate cuts. The flash estimate of annual consumer price growth rose to 2.9% from a two-year low of 2.4% in November. 

The change was influenced by a reduction in government subsidies for electricity, gas, and food. However, a measure of core inflation, excluding the volatile food and energy costs, eased to 3.4% from 3.6%. Meanwhile, the unemployed in Germany rose significantly in December

In the UK, the demand for loans to purchase homes recovered. The mortgage approvals also increased in November according to Bank of England data. The hopes of interest rate cuts increased home prices in the UK, according to a survey shown by Halifax, the mortgage lender.

 

Asian Stock Markets Updates

 

The Asian stock market indexes closed lower during the truncated week. Most of the Asian stock market indices closed on Monday on account of the New Year Holiday. Indian stock markets also closed slightly lower during the week, you can read the Indian stock market weekly report here. The stock market indexes of China, Hang Seng, Japan, South Korea, and Australia ended lower for the first week of 2024.

 

Japan Stock Market

 

Japan’s stock market index Nikkei 225 closed in the red during the holiday-shortened week. The stock market was closed until Wednesday due to the New Year holiday. The stock market reacted negatively on Thursday after a devastating earthquake on January 1, which hit Japan’s Noto Peninsula in the Hokuriku region, followed by a series of aftershocks.

The earthquake sparked discussions that any potential exit by the BoJ from its negative interest rate policy could now be postponed. It is necessary to evaluate the earthquake’s impact on the economy.

 

Chinese Stock Market

 

China’s Shanghai index closed lower during the week, as investors are concerned about its economy. The economic data released this week showed a mixed picture. Earlier, the official data showed manufacturing PMI in December contracted for the third consecutive month. Meanwhile, the nonmanufacturing PMI rose in December as stronger construction activity offset weakness in the services sector. 

The private report by Caixin/S&P Global showed that manufacturing activity rose to an above-forecast 50.8 in December from November’s 50.7, its highest reading since August. Separately, the private Caixin survey of services activity reached its highest level since July and beat economist’s estimates. 

The People’s Bank of China injected RMB 350 billion via its Pledged Supplemental Lending program, a low-cost funding program aimed at policy-oriented banks, in its latest effort to boost the property sector. The new home sales by the country’s top 100 developers continued to decline, falling 34.6% in December compared to the same period last year.

 

In Hong Kong, the Hang Seng Index closed sharply lower during the week following the global negative sentiments.

 

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