# Stocks buoyant while darker forecasts gather on the horizon
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-01-02
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Stock markets edge higher amid IMF recession warning
Meta Description: Stay informed on global market trends amid economic uncertainties. Prepare for possible changes with insights from the IMF and key analysts.
URL: https://financedigest.com/stocks-buoyant-while-darker-forecasts-gather-on-the-horizonhtml

By Nell Mackenzie

(Reuters) – Stock markets edged higher, European bond yields dropped and the dollar remained firm in light trading on Monday amid warnings from the International Monetary Fund’s managing director that a third of the world will fall into recession in 2023.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.06%, just short of an index of global shares, which climbed 0.16%.

The pan-European STOXX 600 index climbed 0.6%, retracing little of the nearly 12% it lost in 2022, bludgeoned by [central banks’](https://www.financedigest.com/stock-pickers-reckon-its-time-to-move-on-from-central-banks.html "Stock pickers reckon it’s time to move on from central banks") aggressive monetary policy tightening.

However, traders were reticent to trust early-year starts in stock and [bond moves with many markets closed for a holiday and ahead of a host of economic numbers due this week](https://www.financedigest.com/shares-and-bonds-nervy-as-rate-hike-week-looms.html "Shares and bonds nervy as rate-hike week looms").

[Inflation data](https://www.financedigest.com/stocks-mixed-dollar-gains-after-robust-inflation-jobs-data.html "Stocks mixed, dollar gains after robust inflation, jobs data") from Europe, minutes from the December U.S. Federal Reserve meeting and U.S. labour market numbers were some of the highlights that Danske [Bank chief](https://www.financedigest.com/deutsche-bank-names-eigendorf-new-chief-sustainability-officer.html "Deutsche Bank names Eigendorf new chief sustainability officer") analyst Piet Haines Christiansen said would be worth watching.

“I would be cautious over interpreting any moves this morning,” said Christiansen.

Markets in the United States, Britain, Ireland, Singapore, Japan, [Hong Kong](https://www.financedigest.com/hong-kong-finance-official-to-make-first-visit-to-britain-in-three-years.html "Hong Kong finance official to make first visit to Britain in three years") and Australia were shut.

Christiansen expected the new [year to kick off with a renewed focus on central banks and inflation](https://www.financedigest.com/spains-inflation-to-be-lower-this-year-than-in-2022-minister.html "Spain’s inflation to be lower this year than in 2022 -minister"). Traders would be vigilant for any signs of an approaching recession, he said.

Buoyant stock prices in Europe might be due, he said, to survey results published on Monday, which pointed towards a rebound in optimism among [euro zone](https://www.financedigest.com/euro-zone-inflation-seen-just-above-ecbs-target-in-2025-poll-shows.html "Euro zone inflation seen just above ECB’s target in 2025, poll shows") factory managers.

S&P [Global’s final manufacturing Purchasing Managers’ Index](https://www.financedigest.com/2017-global-payroll-complexity-index-reveals.html "2017 Global Payroll Complexity Index Reveals ") (PMI) bounced to 47.8 in December from November’s 47.1, matching a preliminary reading but still below the 50 mark separating growth from contraction.

Elsewhere, the [dollar edged almost 0.2% higher](https://www.financedigest.com/wall-street-stocks-power-higher-as-treasury-yields-and-dollar-ease.html "Wall Street stocks power higher as Treasury yields and dollar ease") against a basket of major currencies, while the pound and euro fell 0.4% and 0.2% respectively.

There is an attempt by the dollar index to pull higher today but we do [see that it is losing a good part of the strength it gained last year,”](https://www.financedigest.com/10-year-david-goliath-crusade-finally-sees-justice-for-off-plan-spanish-property-buyers.html "10 year ‘David & Goliath’ crusade finally sees justice for off-plan Spanish property buyers") said Ulrich Leuchtmann, head of forex research at Commerzbank.

After the last Fed meeting, the [market was not convinced that the Fed](https://www.financedigest.com/markets-start-signalling-fed-may-be-going-too-far-amundi.html "Markets start signalling Fed may be going too far – Amundi") won’t cut rates later in 2023. It’s going to be an interesting year.”

U.S. [Treasuries will resume](https://www.financedigest.com/wall-st-flutters-treasury-yields-ease-as-powell-resumes-testimony.html "Wall St flutters, Treasury yields ease as Powell resumes testimony") trading on Tuesday after a public holiday on Monday. The benchmark 10-year [yield climbed](https://www.financedigest.com/stocks-climb-yields-fall-with-dollar-on-inflation-data.html "Stocks climb, yields fall with dollar on inflation data") around 27 basis points (bps) last week and over 200 bps last year, ending 2022 around 3.88%.

German government [bond yields](https://www.financedigest.com/wall-st-stocks-fall-bond-yields-rise-as-china-drops-quarantine-rule.html "Wall St stocks fall, bond yields rise as China drops quarantine rule") on Monday tumbled from their highest levels in more than a decade amid more hawkish signals from the European Central Bank (ECB).

[ECB President Christine Lagarde said euro zone wages were growing](https://www.financedigest.com/analysis-investors-stick-to-bets-on-early-end-to-ecb-hikes-as-uncertainty-grows.html "Analysis-Investors stick to bets on early end to ECB hikes as uncertainty grows") quicker than earlier thought, and the central bank must prevent this from adding to already-high inflation.

Germany’s 10-year [bond yield](https://www.financedigest.com/stocks-fall-bond-yields-rise-as-focus-shifts-to-fed-rate-outlook.html "Stocks fall, bond yields rise as focus shifts to Fed, rate outlook") fell 8.4 bps to 2.47%, after hitting its highest since 2011 at 2.57% on Friday.

Oil markets were closed but prices in 2023 are [set for small gains](https://www.financedigest.com/japanese-yen-gains-as-ueda-set-to-be-named-next-boj-governor.html "Japanese yen gains as Ueda set to be named next BOJ governor"), as a darkening economic backdrop and COVID-19 flare-ups in China threaten demand growth and offset the impact of supply shortfalls caused by sanctions on Russia, a Reuters poll showed on Friday.

The new [year is going to be “tougher than the year we leave behind,” IMF Managing Director Kristalina Georgieva said on Sunday on the CBS Sunday morning news program “Face](https://www.financedigest.com/eu-could-face-gas-shortage-next-year-iea-warns.html "EU could face gas shortage next year, IEA warns") the Nation.

“Why? Because the three big economies – the U.S., EU and [China – are all slowing](https://www.financedigest.com/swiss-gold-exports-to-china-slow-but-shipments-to-turkey-surge.html "Swiss gold exports to China slow but shipments to Turkey surge") down simultaneously,” she said.

(Reporting by Nell Mackenzie Additional reporting Dhara Ranasinghe; Editing by Mark Potter)


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