Australian Market

Australia’s S&P/ASX 200 lost 1.3%, its worst start to a year since 2019. The benchmark index ticked higher at the open on a positive lead from European equities before swiftly dropping as much as 1.9% amid worries about global economic prospects for 2023. All 11 sectors fell as the ASX 200 opened a year in the red for the first time since 2019.

US Market 

U.S. stocks edged lower after investors closed out 2022 with punishing losses. The S&P 500 fell 0.4%, after opening the session slightly higher. The index last year logged its biggest decline since 2008, the year Lehman Brothers collapsed. The tech-focused Nasdaq Composite lost 0.8%, and the Dow Jones Industrial Average slipped less than 0.1%. Investors are wary of what 2023 may bring. Inflation — and the lengths that central bankers are willing to go to tame it — will remain a focus. The Federal Reserve has signaled plans to lift interest rates through the spring, although some traders, expecting that the U.S. could slip into recession, are betting that policy makers could pivot to cutting rates.

Investors are also assessing what China’s border reopening and wider shift from its previous strict stance on Covid-19 will mean for markets. “Markets have been vacillating about getting optimistic about inflation and China, and getting worried about growth,” said Altaf Kassam, head of investment strategy and research for Europe, the Middle East and Africa at State Street Global Advisors. “We’re going to have this pattern of a few up days and a few down days.”

Commodities

Gold prices kicked off the first trading session of 2023 by settling at their highest in more than six months, bolstered by lower bond yields and expectations about more central-bank buying. Gold prices due in February advanced 1.1% to settle at $1,846.10 per ounce on Comex. Prices for the most-active contract ended the session at the highest since June 16, FactSet data show.

“Fear and doubt across wider financial markets mean gold and silver have begun 2023 with a typical New Year surge, attracting speculative inflows as traders see weak growth, high inflation and a worsening geopolitical outlook ahead,” said Adrian Ash, director of research at BullionVault.

Oil Futures

Oil futures kicked off the new year with sharp losses, as growing concerns over a global recession and worries that surging Covid-19 cases in China will crimp demand from one of the world’s largest energy consumers pulled U.S. benchmark prices to their lowest finish in two weeks. West Texas Intermediate crude for February delivery fell 4.2% to settle at $76.93 a barrel on the New York Mercantile Exchange, according to Dow Jones Market Data. March Brent crude lost 4.4% to settle at $82.10 a barrel on ICE Futures Europe.

The drop for oil prices came as recession fears mount, with the International Monetary Fund expecting one-third of the world economy to enter a recession, while New York Fed President William Dudley says a U.S. economic downturn is likely. Kristalina Georgieva, head of the International Monetary Fund, said on the CBS Sunday morning news program “Face the Nation” that the IMF expects one-third of the world economy to be in recession this year. The IMF currently projects a global growth rate of 2.7% in 2023, slowing from 3.2% in 2022. All this doesn’t really make investors feel good about the oil demand outlook, said Phil Flynn, senior market analyst at The Price Futures Group.

Forex

Major currencies were weaker against the US dollar in European and US trade. The Euro fell from highs near US$1.0655 to lows near US$1.0572 and was near US$1.0595 at the US close. The Aussie dollar dropped from highs near US67.66 cents to lows near US66.49 cents and was near US66.65 cents at the US close. And the Japanese yen eased from 131.71 yen per US dollar to JPY132.67 and was near JPY132.35 at the US close.

European Markets

European sharemarkets closed lower on Thursday, with investor sentiment souring on recession worries after solid gains in the previous session. Technology and auto shares both fell 2.5%. The
continent-wide FTSEurofirst 300 index shed 0.9%. The UK FTSE 100 index slid 0.4% after data showed that Britain’s economy (GDP) contracted by 0.3% in the September quarter compared with a previous estimate of -0.2% (survey: -0.2%).

Asian Markets

Earlier Tuesday, Chinese shares closed higher in the first trading session of 2023, erasing their early losses and outperforming regional markets. The turnaround came after the release of a private gauge of China’s factory activity, which indicated a sharper contraction in activity in December.

It boosted investors’ confidence that the central bank will stimulate the sluggish economy given Beijing’s pro-growth stance. The Shanghai Composite Index rose 0.9%. The Shenzhen Composite Index was up 1.4% and the ChiNext Price Index gained 0.4%. Hong Kong stocks Hang Seng Index rose 1.8%, as the market reached its highest closing level since August.