European stocks retreat, oil jumps
By Elizabeth Howcroft
LONDON (Reuters) -European stock markets fell on Tuesday, changing course after having initially opened higher as traders bet on central banks cutting rates in 2024, while oil prices rose after a naval clash in the Red Sea.
Global stock markets rose overall in 2023, having gained particularly in the last two months of the year, while bond yields fell. This upbeat market sentiment initially continued on Tuesday as traders returned from end-of-year holidays, with the pan-European STOXX 600 hitting its highest in nearly two years in early European trading. Euro zone bank stocks rose to their highest since 2018.
But markets struggled to hold on to the gains, and by 1210 GMT the STOXX 600 was down 0.2% on the day. London's FTSE 100 was down 0.2% and Germany's DAX was down 0.2%.
The MSCI World Equity index was down 0.3% on the day.
Wall Street futures pointed to declines in U.S. stock indexes, with Nasdaq futures down 1% and S&P 500 futures down 0.7%.
Traders are watching for clues as to whether major central banks will think inflation has come down enough to allow for rate cuts.
«There is a feeling that (monetary) easing is coming and it seems like there is more to go in the rally in the short term,» said Nordea chief analyst Jan von Gerich.
«I think there's a risk to the downside for stocks but the momentum is strong right now,» he said.
Oil prices jumped more than 2%, in a move analysts said was due to an escalation in tensions in the Red Sea as well as hopes for strong demand from China, where investors are expecting fresh stimulus measures.
U.S. helicopters repelled an attack on Sunday by Iran-backed Houthi militants on a Maersk container vessel in the Red Sea, sinking three Houthi boats and killing
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