US and European stocks fell on Tuesday. This was as traders balanced the improving macroeconomic outlook for the global economy with lingering concerns that inflation could prove more sticky than previously thought.
The regional Stox Europa 600 fell 0.2%, while Germany’s Dax fell 0.1%. His FTSE 100 in London fell 0.4% after UK public sector borrowing more than doubled from a year earlier to his £27.4bn in December.
Wall Street’s blue chip S&P 500 fell 0.3%, with all sectors except financials, industrials and real estate in negative territory. Trading on dozens of shares was temporarily halted earlier in the day after problems were reported in the opening auction.
Johnson & Johnson shares fell 1.2% after the group reported fourth-quarter results, even as the drugmaker said its 2023 earnings are expected to beat analyst estimates. , General Electric fell 0.2%.
“Feel better [the] Analysts at JP Morgan said the S&P 500 rose to its highest level since early December, with semiconductor and technology stocks showing particularly strong gains.
US banks don’t expect stocks in January market But the rally continues. “Recent economic data weakening and expected earnings forecasts falling and weak [full-year] The guidance points to markets that are likely to fall,” he said.
But some are more optimistic. MUFG currency analyst Lee Herdman said the re-opening of the Chinese economy, receding recession fears in Europe and lower inflation in the U.S. meant that “investor concerns about a hard landing for the global economy” had eased. said to do. Despite claims by officials at the U.S. Federal Reserve (Fed) and European Central Bank (ECB) that the fight against inflation is far from being won, traders this year said they expected the central banks to end the rate hike cycle temporarily. I have new confidence that I can stop,” he added.
The euro zone “returned to growth slightly” in early 2023, according to the Flash Purchasing Managers Index released by S&P Global on Tuesday morning.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said the data “adds evidence that the region could escape a recession.”
Andrew Kenningham, chief European economist at Capital Economics, said the region’s PMI was consistent with the economy being “almost stagnant,” adding: “There is nothing here.” He added that the ECB’s rate hike rate could be cut by 1 percentage point over the next two months. No more”.
US private sector production continued to decline in January, rising to 46.6 from 45 in December, below the 50 threshold for growth, according to Tuesday’s Composite PMI. Analysts at ABN Amro said the figures support the company’s forecast of a “slight decline” in US gross domestic product this quarter.
The dollar came under pressure on Tuesday as the currency’s strength measure against a basket of six peers fell 0.11%. U.S. Treasuries rose, and the benchmark 10-year U.S. Treasury yield fell 0.04 points to his 3.48%. Bond yields move inversely with prices.
In Asia, Hong Kong’s Hang Seng Index rose 1.8%. Japan’s Nikkei 225 rose his 1.5%, largely recovering from a sell-off sparked by the Bank of Japan’s unexpected adjustment to its long-standing yield curve restraint policy in late December.
The price of Brent crude, the international oil benchmark, fell 1.8% to $86.57 a barrel. Analysts at Bank of America expect Brent to hit $110 a barrel by this summer, fueled by rising demand from China.