Global markets are trying to put last year’s misery behind them


Global stocks surge higher on the first major trading day of 2023 as investors try to look beyond a grim outlook For the global economy, the worst of the covid virus is in China and stubbornly high inflation in Europe.

The European Stoxx 600 was up 1.2% by 08:42 ET on Tuesday, off previous highs but extending the strong gains it posted on Monday when the Chinese and US markets were closed. The German DAX rose 0.7%, while the French CAC rose 0.5%.. we futures were by approximately 1%.

Investors were buoyed by the survey data, released on Monday, showing that Suppliers Inflationary pressures eased slightly for manufacturers in economies that use the euro currency.

Shortages of spare parts have also eased in Germany, Europe’s largest economy, according to data released by the Institute for Economic Research (Ifo) on Tuesday. Inflation in the country continues to trend downward. Data published by Germany’s Federal Statistical Office on Tuesday showed that consumer prices rose 8.6% in December, compared to 10% in the previous month, and 10.4% in October.

London’s FTSE 100 index gained 2.3% in the morning trading, before retreating slightly to rise 1.2%.

Holger Schmieding, chief economist at Berenberg Bank, struck a cautiously optimistic note about the coming year.

“Unless a new geopolitical shock intervenes, the new year could be much less turbulent than 2022. Especially for Europe, the outlook continues to become considerably less negative,” he wrote in a note on Tuesday.

In Asia, markets ended the day strongly in positive territory, recovering from early losses.

Hong Kong’s Hang Seng fell as much as 2% after a closely watched private survey showed that China’s economy ended last year with factory activity falling. But the index quickly reversed course, gaining 1.8% by the close, as it hopes to reopen the city’s borders with mainland China on January 8. stock reinforced.

Stock trading in mainland China was also volatile on the first day. The Shanghai Composite Index opened lower, but recovered losses to close 0.9% higher.

The market gains on Tuesday provide good news for investors after the rollercoaster ride of 2022 33 trillion dollars Wiping out the global stock markets.

Many suffered huge losses in 2022 as central banks raised interest rates at an unprecedented rate in an effort to control soaring inflation.

The S&P 500 has lost 19.4% over the past 12 months – its worst year since 2008 – despite hitting an all-time high this past January. The European Stoxx 600 fell 12.9%, its biggest annual loss since 2018. Hong Kong’s Hang Seng fell 15.5%, its weakest performance since 2011.

It’s notoriously difficult to predict the state of the markets – and it often is Frankly wrong – But it seems that many last year’s economic Headwinds will Stay aroundand some may get worse.

Kristalina Georgieva, head of the International Monetary Fund, said: CBS interview that aired on Sunday that 2023 will be tougher on the global economy than 2022.

Georgieva said the world’s three largest economies, the United States, the European Union and China, are all “slowing down simultaneously,” and the International Monetary Fund He predicted “a third of the global economy will be in recession” this year.

“Almost everyone goes into 2023 with a healthy dose of fear,” Craig Erlam, chief market analyst at Oanda, said in a note on Tuesday.

He added, “The outlook is understandably bleak and will remain so unless something significant changes, whether with regard to the war in Ukraine or inflation.”

Investors can expect the world’s central banks to continue raising interest rates to tame historical levels of inflation, despite signs that rising prices globally have caused this to happen. I started to coolThis is partly due to lower energy prices.

Both the European Central Bank and the US Federal Reserve said they plan to continue raising the cost of borrowing in the near term, a move that usually hurts corporate profits — and their investors.

China is also unpredictable. While investors are widely pleased that the country abandoned its strict anti-Covid policy last month – and promised to boost demand in the world’s second-largest economy – Huge numbers of cases and a possible downturn in early 2023 It can limit gains.

Julia Horowitz and Laura He contributed reporting.

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