Global stock markets mostly dipped on Tuesday, the first trading day of the year, as a global equity rally stumbled and oil prices briefly jumped as tensions ratcheted higher in the Red Sea.

Despite the drop in stocks on Tuesday, investors are eying more gains in 2024 as central banks prepare a series of interest-rate cuts as inflation cools.

Stock market records tumbled in the final months of last year in New York, Frankfurt, Paris and Tokyo as investors piled into equities in anticipation of rate cuts.

"Notwithstanding the extended winning streak, we are not sure this negative disposition is all that surprising to market participants, who recognized that there was some performance chasing at the end of 2023 and that some profit taking was bound to happen in the wake of a parabolic advance," said Briefing.com analyst Patrick O'Hare.

Nevertheless, investors retain a positive outlook, according to analysts.

"There remains an increasing belief that Fed rate cuts, which have bullishly marked all capital market trends in the last eight weeks, are still fully ingrained in stock market sentiment," said SPI Asset Management's Stephen Innes.

He added that there was a question on how investors would reconcile the difference between market expectations of 150 basis points of cuts and the Fed's forecast of 75.

Despite the upbeat outlook on rates, Asian markets started the year with little fanfare. Hong Kong and Shanghai each extended last year's losses.

Traders were unmoved by a speech by Chinese President Xi Jinping in which he said the economy had become "more resilient and dynamic".

Observers warned that while Beijing has pledged a series of measures to kickstart growth, much more was needed to instil confidence, particularly regarding the property sector.

Tokyo was closed for a holiday, though investors are keeping an eye on developments in Japan a day after a huge earthquake that Prime Minister Fumio Kishida said caused "extensive" damage and numerous casualties.

All tsunami warnings from that quake were lifted on Tuesday.

Oil prices rallied more than 2 percent on supply concerns after Iran dispatched a warship to the Red Sea in response to the US Navy's destruction of three Huthi boats, though they later reversed course.

Tehran's move comes as tensions still run high in the waterway, where the Yemeni rebels have launched attacks on several international container ships, causing some firms to stop using it.

Analyst Axel Rudolph at the trading platform IG said the advance in oil prices "turned into nothing as investors turned their attention to money markets and yields instead".

While a number of shipping companies have resumed transit following efforts by a US-led naval coalition to police the maritime route, Denmark's Maersk extended its moratorium on using the key waterway that allows ships access to the Suez Canal.

Bitcoin broke $45,000 for the first time since April 2022 on optimism that the United States would allow wider trading of the world's biggest cryptocurrency.

"Crypto looks to be setting itself up for a big year ahead, with bitcoin rising into a fresh 21-month high on anticipation of the likely approval of the spot bitcoin ETF product that will see Wall Street finally gain a strong presence in the industry," said Joshua Mahony, chief market analyst at Scope Markets.

Key figures around 1630 GMT

New York – Dow: FLAT at 37,684.73 points

New York – S&P 500: DOWN 0.6 percent at 4,741.38

New York – Nasdaq: DOWN 1.4 percent at 14,797.11 

London – FTSE 100: DOWN 0.2 percent at 7,721.52 (close)

Paris – CAC 40: DOWN 0.2 percent at 7,530.86 (close)

Frankfurt – DAX: UP 0.1 percent at 16,769.36 (closed)

EURO STOXX 50: DOWN 0.2 percent at 4,512.81 (close)

Hong Kong – Hang Seng Index: DOWN 1.5 percent at 16,788.55 (close)

Shanghai – Composite: DOWN 0.4 percent at 2,962.28 (close)

Tokyo – Nikkei 225: Closed for a holiday

Dollar/yen: UP at 141.81 yen from 141.01 yen

Euro/dollar: DOWN at $1.0959 from $1.1040

Pound/dollar: DOWN at $1.2622 from $1.2738

Euro/pound: UP at 86.79 pence from 86.63 pence  

West Texas Intermediate: DOWN 1.4 percent at $70.64 per barrel 

Brent North Sea Crude: DOWN 1.1 percent at $76.17 per barrel