Futures edge lower after bumper 2023, Bitcoin tops $45K – what’s moving markets

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Investing.com — U.S. stock futures point to a lower start to 2024 following a blockbuster year on Wall Street. Elsewhere, China’s BYD (SZ:002594) unveils fourth-quarter production figures that heap pressure on Tesla’s (NASDAQ:TSLA) spot as the world’s biggest electric vehicle maker. Bitcoin tops $45,000, bolstered by expectations that U.S. securities regulators may be edging closer to approving an exchange traded fund tracking the megapopular cryptocurrency.

1. Futures dip ahead of first trading session of 2024

U.S. stock futures were lower ahead of the start of a new trading year, as investors attempted to gauge the staying power of a bumper 2023 for equities on Wall Street.

By 06:35 ET (11:35 GMT), the Dow futures contract had slipped by 115 points or 0.3%, S&P 500 futures had dropped by 23 points or 0.5%, and Nasdaq 100 futures were down by 128 points or 0.7%. Markets were closed for the New Year’s Day holiday on Monday.

The main indices surged last year despite initial worries that an unprecedented string of Federal Reserve interest rate hikes could spark a recession. But resilience in the U.S. economy helped fuel optimism that the Fed could engineer a so-called “soft landing,” in which inflation is cooled without causing an economic meltdown.

Investors will have the chance to parse through a bevy of fresh data this week that could shed light on the state of the world’s largest economy — and, particularly, its all-important labor market — in the final days of 2023.

2. U.S. indices post blockbuster 2023

The major averages all slipped marginally on Friday, although the declines took little away from what was a stellar 2023 on Wall Street.

The benchmark S&P 500 surged by 24.2% annually, closing out the year with a streak of nine consecutive winning weeks — its best since 2004. The tech-heavy Nasdaq Composite also soared by 43.4%, driven in part by strength in mega-cap stocks and emerging enthusiasm over the possible applications of artificial intelligence.

Meanwhile, the 30-stock Dow Jones Industrial Average jumped by 13.7%, boosted by seven record closing levels in the last days of the year.

Equities endured several shocks throughout 2023, including a regional banking crisis marked by the collapse of Silicon Valley Bank and the outbreak of fresh hostilities in the Middle East. Attention now turns to the new year, with some analysts wondering if the solid returns of 2023 may have left stock valuations overstretched.

3. BYD production figures add to pressure on Tesla

China’s BYD said it sold a record 526,000 battery-powered cars in the fourth quarter, putting further pressure on U.S. rival Tesla’s position as the world’s largest manufacturer of electric vehicles (EVs).

For 2023, Shenzhen-based BYD also sold over 3 million new EVs and hybrids, a roughly 62% increase, figures released by the company on Monday showed. The result leaves Elon Musk’s Tesla, which offers only battery-powered automobiles, potentially on track to sell fewer cars than BYD for the second straight year.

Tesla’s output in the first nine months of 2023 clocked in at 1.35 million cars. The group is set to release its full-year production and delivery numbers on Tuesday.

BYD, which counts Warren Buffett’s Berkshire Hathaway (NYSE:BRKa) as a major investor, controlled around 17% of the global market for electric-only vehicles at the end of the third quarter, matching Tesla’s market share.

4. Bitcoin clears $45,000

Bitcoin rose sharply to a 21-month high on Tuesday on increased speculation that the U.S. Securities and Exchange Commission was close to approving a spot exchange traded fund (ETF) for the world’s largest cryptocurrency.

By 05:05 ET, Bitcoin had jumped by 7.0% to $45,630.9, reaching its highest level since early-April 2022.

The increase came as an extension of a strong recovery in 2023 for Bitcoin, when the token surged more than 100% in value after starting the year at around $17,000.

Partly driving the gains was speculation over the SEC’s approval of an ETF that directly tracks Bitcoin’s prices. The regulator has a January 10 deadline to approve or reject a spot ETF application from Ark and 21 Shares, according to a Reuters report. The ruling could set the precedent for ETF applications from several other fund managers for a similar product.

5. Oil rises

Oil prices rose Tuesday, rebounding after hefty losses in 2023, on concerns over potential supply disruptions in the Middle East.

Reports said on Tuesday that an Iranian warship had entered the Red Sea, a vital trade route between Europe and Asia. The news added to fears over the flow of supplies in the region, which has been impacted recently by a series of strikes by Iran-backed Houthis on several military and commercial vessels.

By 05:04 ET, the U.S. crude futures was trading 2.2% higher at $73.25 a barrel, while the Brent contract had climbed 2.3% to $78.81 per barrel. 

Both benchmark contracts had shed over 10% each in 2023, coming under pressure from persistent concerns over sluggish demand and higher-than-expected supply conditions.