In the last session of the year, recession is observed in Europe
By Laetitia Volga
PARIS (Reuters) – Europe’s main stock markets are expected to open in the red on Friday, ending a rough year for global equities, particularly with monetary tightening by major central banks.
Early indications available show the Paris CAC 40 up 0.53%, the Dax in Frankfurt up 0.41%, the FTSE in London down 0.27% and the EuroStoxx 50 up 0.47% for UK markets to close at 13:30 GMT.
It is likely that there will be no time to take risks for the last session of 2022. Investors have been wondering about the market implications of China abandoning its “zero-Covid” policy in recent days.
On the one hand, the resumption of travel could boost the global economy, but it could also spread the coronavirus beyond China’s borders. On the other hand, investors fear that rising demand from China will push up commodity prices, prompting central banks to raise interest rates further to curb inflation.
Issuers’ struggle against rising prices has been at the center of market news throughout the year and should remain so in 2023, as well as the likely onset of recession and geopolitical tensions.
European markets should end the year on a negative note: the CAC 40 is currently down 8.1%, the Dax is down 11.41% and the European Stoxx 600 is down 11.78%, its worst performance since 2018.
The MSCI global stock index is expected to do worse, with an annual decline of around 20% not seen since the 2008 financial crisis.
The Footsie, on the other hand, should be singled out for its positive performance over the year as a whole, with the flagship London index benefiting from exposure to rising commodity prices due to the war in Ukraine.
ON WALL STREET
The New York Stock Exchange ended higher on Thursday with a jump in growth stocks on the back of easing bond yields and a reserved welcome for the weekly jobless claims gauge.
The slightly higher registration numbers supported the view that the Federal Reserve’s monetary tightening is working and eased concerns about future rate hikes.
The Dow Jones added 345.09 points, or 1.05%, to 33,220.8, the S&P 500 added 66.06 points, or 1.75%, to 3,849.28, and the Nasdaq Composite added 264.09 points, or 1.08 increased by 8%.
Transaction volume was relatively low, with 8.78 billion shares bought versus the average of 10.95 billion in the last twenty sessions.
In Tokyo, the Nikkei erased gains at the end of the session to end perfectly balanced. Japanese markets won’t reopen until Wednesday after a break for New Year’s celebrations.
In China, it’s time for major equity indexes to recover, with investors focusing on positives expected in 2023, such as Beijing’s support for growth despite uncertainties about health developments and the country’s reopening. Related to COVID-19.
Banks Citi, Bank of America and JPMorgan recently raised their recommendations on Chinese stocks, expecting an economic recovery next year.
China’s large-cap CSI 300 index gained 0.7%, while Shanghai’s SSE Composite gained 0.71%.
With the decrease in risk appetite, the dollar gained 0.17% against the basket of benchmark currencies. Thus, the euro decreased by -0.16% to 1.0644.
Changes in the US bond market are limited, with the ten-year yield unchanged at 3.8369%.
Oil prices edged up for the second year in a row on supply cuts from the war in Ukraine, a stronger dollar and weaker demand from China.
Brent rose 0.61% to $83.97 a barrel, US light crude oil (West Texas Intermediate, WTI) rose 0.68% to $78.93.
The former is 50.2% in 2021, after growing 55% last year, and the latter is currently showing an annual gain of 7.6% after growing 4.5% in 2022.
(Laetitia Volga, editing by Matthieu Protard)