Berliner Boersenzeitung - No Santa rally for stocks as equities slide

Wall Street's three main indices slid at the start of trading, adding to losses on Friday that have put paid to Wall Street's usual holiday-period "Santa Claus rally".

"We can't drive major conclusions in a holiday-shortened and thin-trading-volume week, but last week's price action looked pretty close to the narrative of rotation from tech to non-tech stocks that many investors expect to be the theme of next year," noted Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

US tech stocks had led the losses Friday, with Elon Musk's electric car giant Tesla shedding around five percent and AI chipmaker Nvidia off around two percent.

Shares in Tesla fell another two percent at the start of trading on Monday, while Nvidia slid 1.6 percent.

Briefing.com analyst Patrick O'Hare said there was no news catalyst for the weakness.

"The selling interest, then, has profit-taking activity written on it with a P.S. presumably of rebalancing interest," he said.

"The thing is, there isn't a rebalancing push in the stock market this morning. The weakness is broad based."

Weighing on sentiment were worries about slower-than-hoped US interest rate cuts and possible higher import tariffs once Trump is inaugurated on January 20.

Yields on US government debt dipped on Monday, but have pushed higher at the longer-dated maturities on worries about the higher inflation and interest rates, with the yield on 10-year bonds hitting 4.63 percent recently.

"If yields continue to hold at these levels, or push higher towards 5.0 percent, then this will be a strong headwind for equity prices, as investors choose the relative safety of a near-guaranteed 5 percent return on funds in US Treasuries, compared with the uncertainty of stocks, many of which are trading at or near all-time highs, while being historically overvalued by many measures," said Trade Nation analyst David Morrison.

In Europe, the main indices in Frankfurt, London and Paris were all lower in afternoon trading.

In Asia, Tokyo closed down almost one percent Monday, its last day of trading until January 6.

Nissan dropped as much as 6.7 percent on worries about its mooted merger with fellow Japanese automaker Honda.

Overall the Nikkei 225 index gained almost 20 percent in 2024, finally surpassing the high seen before Japan's asset bubble burst in the 1990s.

In Seoul, Jeju Air shares fell as much as 15 percent after one of its planes crashed in South Korea on Sunday, killing 179 people.

Another Jeju Air flight had to return after encountering a landing gear problem on Monday, the airline said.

Korean authorities ordered an inspection of all Boeing 737-800 aircraft operated by the country's carriers.

Shares in Boeing fell 5.3 percent as trading got underway in New York.

South Korea was also hit with further political turmoil, with authorities issuing an arrest warrant for suspended President Yoon Suk Yeol after his declaration of martial law.

Oil prices rose.

- Key figures around 1430 GMT -

New York - Dow: DOWN 1.0 percent at 42,559.36 points

New York - S&P 500: DOWN 1.1 percent at 5906.33

New York - Nasdaq Composite: DOWN 1.3 percent at 19,460.41

London - FTSE 100: DOWN 0.4 percent at 8,117.34

Paris - CAC 40: DOWN 0.3 percent at 7,332.74

Frankfurt - DAX: DOWN 0.4 percent at 19,909.14

Tokyo - Nikkei 225: DOWN 1.0 percent at 39,894.54 points (close)

Hong Kong - Hang Seng Index: DOWN 0.2 percent at 20,041.42 (close)

Shanghai - Composite: UP 0.2 percent at 3,407.33

Euro/dollar: DOWN at $1.0400 from $1.0429 on Friday

Pound/dollar: DOWN at $1.2562 from $1.2579

Dollar/yen: DOWN at 157.50 yen from 157.89 yen

Euro/pound: DOWN at 82.82 pence from 82.87 pence

West Texas Intermediate: UP 0.9 percent at $71.24 per barrel

Brent North Sea Crude: UP 0.7 percent at $74.29 per barrel

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(A.Lehmann--BBZ)