Stock markets wobbled yesterday as data reinforced worries about a stuttering Chinese economy, helping haven investments including the yen to rally.
However, equities in Europe and the US came off their lows, creeping into positive territory, as oil prices rebounded more than $2 per barrel.
The euro slid to 123.89 yen, the lowest level since June 2017. The dollar hit a seven-month low at 108.71 yen.
With a number of potential banana skins dotting the next 12 months, markets are volatile across the board.
Stock markets yesterday extended a slump that in 2018 saw global indices suffer their worst year since the global financial crisis a decade ago.
Hong Kong’s main stocks index led the losses on the first trading day of 2019, tumbling 2.8 per cent, while Shanghai shed more than one per cent after two indicators showed Chinese manufacturing activity shrank in December.
Asia’s losses fed through into Europe and the US, before equities rode on the coattails of a rally in oil prices.
In Europe, both London and Frankfurt closed the day with small gains.
On Wall Street, the Nasdaq climbed into positive territory after opening the day almost two per cent lower.
“Bruised by the volatility of the fourth quarter of 2018, investors aren’t yet grabbing the chance to buy the dip with both hands, but it is at least encouraging to see a continuation of the move higher instead of the relentless selling of the past few weeks,” said Chris Beauchamp, chief market analyst at online trading house IG.
Investors are also keeping an eye on the ongoing US government shutdown, which is now in its second week. US President Donald Trump on Tuesday invited leaders from both parties to talks to end the standoff, but with Democrats refusing to pass any budget that would fund the President’s Mexican border wall, there is little optimism a deal can be made.
Also on the radar are trade talks between China and the US, which are set to begin this month, with Trump hailing “big progress” on the issue at the weekend.
The President and his Chinese counterpart, Xi Jinping, last month agreed to a 90-day halt in their painful tariffs spat so they could resolve their differences.
Immediate attention was also on the release of US jobs data, which could provide fresh evidence of the state of the world's top economy.
A strong reading would put pressure on the Federal Reserve to continue to lift interest rates, a negative for stock markets, which were battered by concerns about the rising cost of borrowing.