©Portal. FILE PHOTO: A giant electric stock exchange listing board is seen at a building in Tokyo, Japan December 30, 2022. Portal/Issei Kato 2/2
By Nell Mackenzie
(Portal) – World stocks rose, European bond yields fell and the dollar held steady in light trade on Monday after the chief executive of the International Monetary Fund warned that a third of the world will fall into recession in 2023.
MSCI’s broadest index of Asia-Pacific stocks outside of Japan rose 0.04%, just behind an index of global stocks that rose 0.18%.
The pan-European index rose 0.8%, recouping some of the nearly 12% it lost in 2022, shaken by aggressive monetary tightening by central banks.
Traders were reluctant to trust the early starts in stocks and bonds for the year as many markets were closed for holidays and a slew of economic data is due this week.
Inflation data from Europe, minutes from the US Federal Reserve Board meeting in December and US jobs figures were some of the highlights that Piet Haines Christiansen, chief analyst at Danske Bank, said were worth watching.
“I would be careful about interpreting plays this morning,” said Christiansen.
Markets in the UK, Hong Kong, Ireland, Japan, Singapore, Canada and the United States were closed.
Christiansen expected the new year to start with renewed focus on central banks and inflation. Traders would be alert for signs of an approaching recession, he said.
Buoyant stock prices in Europe could be due to survey results released on Monday, which indicated a recovery in optimism among euro-zone factory managers.
S&P Global’s final manufacturing purchasing managers’ index (PMI) rebounded to 47.8 in December from 47.1 in November, a provisional reading but below the 50 mark that separates growth from contraction.
“Europe is taking the latest round of PMIs well enough as the final readings help to confirm the view (hope?) that the worst may be over for EU bloc manufacturers, particularly as energy prices return to levels of declining last February.” Russ Mold, investment director at AJ Bell, wrote in comments via email.
DOLLAR FIGHTS TO MAINTAIN STRENGTH
Elsewhere, the dollar rose nearly 0.2% against a basket of major currencies, while the pound and euro fell 0.4% and 0.2%, respectively.
“There is an attempt today from the to pull up but we see it losing a good bit of the strength it gained last year,” said Ulrich Leuchtmann, head of forex research at Commerzbank (ETR: ).
“After the last Fed meeting, the market was unconvinced that the Fed will not cut rates later in 2023. It will be an interesting year.”
US Treasuries will resume trading on Tuesday after a bank holiday on Monday.
German government bond yields fell Monday from their highest level in more than a decade amid further hawkish signals from the European Central Bank (ECB).
ECB President Christine Lagarde said wages in the euro zone were rising faster than previously thought and the central bank must prevent this from exacerbating already high inflation.
The 10-year German bond yield fell 12 basis points to 2.44% after hitting 2.57% on Friday, the highest since 2011.
Oil markets were closed but prices were set for small gains in 2023 as a darkening economic backdrop and COVID-19 flare-up in China threaten demand growth and offset the impact of supply shortages caused by sanctions on Russia, such as a Portal poll on Friday revealed.
The new year will be “tougher than the year we are leaving behind,” IMF Managing Director Kristalina Georgieva told CBS’ Face the Nation news program on Sunday.
“Why? Because the big three economies — the US, the EU and China — are all slowing down at the same time,” she said.