In contrast to an index of global equities, which increased by 0.21 percent, MSCI’s broadest index of Asia-Pacific shares outside of Japan increased by only 0.04 percent.
The strong tightening of monetary policy by central banks in 2022 caused the pan-European STOXX 600 index to lose over 12 percent of its value, but it has since recovered part of that loss.
With many markets idle for a vacation and a slew of economic reports expected this week, traders were hesitant to trust early-year beginnings in stock and bond movements.
The minutes from the US Federal Reserve meeting in December, European inflation statistics, and US labour market data were some of the things Piet Haines Christiansen, chief analyst at Danske Bank, thought would be worth monitoring.
Christiansen advised caution when analysing any changes made this morning.
Australian, British, Hong Kong, Irish, Japanese, Singaporean, and American markets were all closed.
Christiansen anticipated that central banks and inflation would once again be in the spotlight when the new year began. He warned that traders will be on the lookout for any warning indications of an impending recession.
He said that the reason for Europe’s buoyant stock prices may be related to survey findings released on Monday that suggested a resurgence in manufacturing managers’ optimism in the euro zone.
The final manufacturing Purchasing Managers’ Index (PMI) from S&P Global increased from 47.1 in November to 47.8 in December, matching a preliminary figure but falling short of the 50-point threshold distinguishing expansion from contraction.
According to Russ Mould, investment director at AJ Bell, “Europe is taking the most recent round of PMIs well enough, as the final readings help to confirm the view (hope?) that the worst may be over for the EU bloc’s manufacturers, especially as energy prices have declined to levels from last February.”
Struggling to maintain strength, Dollar
In other news, the euro and pound both declined by 0.4 percent and 0.3 percent, respectively, while the dollar moved up almost 0.1 percent versus a basket of major currencies.
Ulrich Leuchtmann, head of currency research at Commerzbank, stated: “There is an attempt by the dollar index to climb higher today but we do see that it is losing a large portion of the power it earned last year.”
“The market was not convinced following the most recent Fed meeting that interest rates wouldn’t be lowered later in 2023. The coming year is going to be fascinating.”
Following a vacation on Monday, US Treasury trading will resume on Tuesday.
In response to more hawkish signals from the European Central Bank, German government bond rates on Monday declined from their highest levels in more than a decade (ECB).
According to ECB President Christine Lagarde, salaries in the euro zone are increasing more quickly than previously anticipated, and the central bank must stop this from driving up inflation, which is already high.
After reaching its highest level since 2011 on Friday at 2.57 percent, the yield on Germany’s 10-year bonds dropped 13 basis points to 2.43 percent.
Despite the fact that oil markets were closed, a Reuters poll on Friday indicated that oil prices are expected to rise modestly in 2023 as a result of COVID-19 outbreaks in China and a deteriorating economic environment that threaten demand growth and counteract the effects of supply shortages brought on by Russian sanctions.
Here are the stocks to watch out for in today’s trading session