Volkswacht Bodensee - Global stocks mostly retreat in rally hangover

Oil prices continued fluctuating after briefly spiking Tuesday on supply concerns linked to simmering tensions between Iran and the United States in the Red Sea.

The dollar rose against the euro and yen as dealers awaited fresh clues on the Fed's interest-rate outlook in the upcoming minutes from its final monetary policy meeting of 2023.

"Messaging from the central bank seemed a touch confused at the end of 2023 as it initially implied rate cuts in 2024 before such talk was dampened," noted AJ Bell investment director Russ Mould.

The "minutes may provide some clarity", he added.

Equities surged late last year on expectations the US central bank would slash interest rates in 2024 as inflation cools.

However, analysts have warned of an excessive rally and that investors should prepare for a pullback, with tech titans such as Apple and Amazon likely to take a hit.

"The market may have gotten ahead of itself about (rate) cuts," said City Index analyst Fiona Cincotta.

The Fed's post-meeting statement in December had indicated three interest rate cuts this year, though some market participants are tipping far more.

Briefing.com analyst Patrick O'Hare said that in December the market welcomed Fed Chairman Jerome Powell's indication there was some talk at the meeting about when it might be appropriate to begin reducing interest rates.

"Market participants will want to see today just how involved that conversation was," he said.

"If it doesn't sound as lively as the market thought it was at the time, then market rates are at risk of backing up and serving as a catalyst for stocks rolling over," he added.

Vishnu Varathan at Mizuho Bank said the year "has kicked off with risk retrenchment", said

"Whether this is a durable purge from excessive exuberance or merely profit-taking is unclear."

David Morrison at Trade Nation said the US indices look particularly overbought as Europe's major indices began consolidating in mid-December.

"The upcoming fourth quarter earnings season may be the perfect excuse to take profits and it’s possible that we get something deeper now, as there have been no serious corrections in the whole of this bull run," he said.

Friday sees the release of the closely watched US non-farm payrolls data.

- Key figures around 1430 GMT -

New York - Dow: DOWN 0.3 percent at 37,613.71 points

New York - S&P 500: DOWN 0.4 percent at 4,721.85

New York - Nasdaq: DOWN 0.8 percent at 14,654.05

London - FTSE 100: DOWN 0.6 percent at 7,679.33

Paris - CAC 40: DOWN 1.7 percent at 7,399.69

Frankfurt - DAX: DOWN 1.3 percent at 16,556.47

EURO STOXX 50: DOWN 1.5 percent at 4,446.89

Hong Kong - Hang Seng Index: DOWN 0.9 percent at 16,646.41 (close)

Shanghai - Composite: UP 0.2 percent at 2,967.25 (close)

Tokyo - Nikkei 225: Closed for a holiday

Euro/dollar: DOWN at $1.0917 from $1.0942 on Tuesday

Dollar/yen: UP at 143.29 yen from 141.99 yen

Pound/dollar: UP at $1.2626 from $1.2617

Euro/pound: DOWN at 86.45 pence from 86.72 pence

West Texas Intermediate: UP 1.3 percent at $71.29 per barrel

Brent North Sea Crude: UP 1.3 percent at $76.91 per barrel

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