Limited stock growth amid gloomy forecasts
2023.01.02 10:40
Limited stock growth amid gloomy forecasts
Budrigannews.com – After the managing director of the International Monetary Fund issued warnings that a third of the world will enter a recession in 2023, Monday’s light trading saw a slight increase in global stocks, a decrease in the yields on European bonds, and a sustained hold on the dollar.
The broadest MSCI index of Asia-Pacific shares outside of Japan increased by 0.04%, falling just short of the global shares index, which increased by 0.18 percent.
The pan-European index increased by 0.8 percent, regaining some of the nearly 12 percent it had lost in 2022 due to central banks’ aggressive monetary policy tightening.
Due to the fact that many markets were closed for the holiday and a number of economic data were due this week, traders were hesitant to trust stock and bond moves in the early part of the year.
Piet Haines Christiansen, chief analyst at Danske Bank, stated that some of the highlights that would be worth watching included inflation data from Europe, minutes from the December meeting of the United States Federal Reserve, and employment statistics from the United States.
Christiansen stated, “I would be cautious over interpreting any moves this morning.”
The United Kingdom, Hong Kong, Ireland, Japan, Singapore, Canada, and the United States all had their markets closed.
Christiansen anticipated that central banks and inflation would receive renewed attention in the new year. He stated that traders would be on the lookout for any indications that a recession was coming.
He suggested that the findings of a survey that were released on Monday, which indicated a resurgence in optimism among factory managers in the euro zone, could be the reason for Europe’s soaring stock prices.
The final manufacturing Purchasing Managers’ Index (PMI) from S&P Global rose to 47.8 in December from 47.1 in November, which was the same as the initial reading but was below the 50 threshold that separates growth from contraction.
“The final readings help to confirm the view (hope?) that Europe is taking the most recent round of PMIs well enough.” that the worst may be over for manufacturers in the EU, especially as energy prices return to February levels,” Russ Mould, AJ Bell’s investment director, wrote in an email comment.
The dollar gained almost 0.2 percent against a basket of major currencies in other areas, while the pound and euro lost 0.4 percent and 0.2 percent, respectively.
Ulrich Leuchtmann, head of forex research at Commerzbank (ETR:), stated, “There is an attempt by the to pull higher today, but we do see that it is losing a good part of the strength it gained last year.”
“The market was not convinced that the Fed will not cut rates later in 2023 after the last Fed meeting.” This year is going to be interesting.”
After Monday’s public holiday, trading in U.S. Treasuries will resume on Tuesday.
In response to more hawkish signals from the European Central Bank (ECB), German government bond yields fell on Monday from their highest levels in more than a decade.
According to Christine Lagarde, president of the ECB, wages in the euro area are rising faster than previously thought, and the central bank must prevent this from increasing inflation, which is already high.
After reaching its highest level since 2011 on Friday, when it was 2.57 percent, Germany’s 10-year bond yield decreased by 12 basis points to 2.44 percent.
Despite the fact that oil markets were closed in 2023, prices were poised for modest gains in the wake of a deteriorating economic backdrop and COVID-19 flare-ups in China that pose a threat to demand growth and offset the impact of supply shortages brought on by sanctions against Russia.
Kristalina Georgieva, the managing director of the International Monetary Fund, stated on the CBS Sunday morning news program “Face the Nation” on Sunday that the new year will be “tougher than the year we leave behind.”
“Why? “Because the three major economies, China, the EU, and the United States, are all slowing down at the same time,” she stated.
More European stock market is growing on first day of trading in 2023
