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European stocks start 2023 rising after last year’s sharp decline

European stock markets have opened 2023 high as traders scooped up stocks at discounted prices following last year’s plunge in global markets.

The regional Stox 600 rose 1% on Monday after the index fell 12.9% in 2022. France’s Cac 40 was up 1.9% on Monday, Spain’s Ibex was up 1.7% and Italy’s FTSE Mib was up 1.9%. Germany’s Dax rose 1.1%. London and New York markets are closed for public holidays.

Global stock and bond markets were hit by rising central bank interest rates, war in ukraine caused great losses. The MSCI Allworld Stock Index lost 19.8% of its value as many of the pandemic-era high flyers, such as electric car maker Tesla, fell.

Monday’s gains in Europe were broad, with most sectors of the Stox 600 gaining. Economically sensitive industries such as real estate, energy and retail led the rise. Defensive sectors such as healthcare and consumer goods lagged behind.

Despite a strong start to 2023, many investors and analysts remain cautious heading into 2023 and expect monetary policymakers to continue their battle against inflation. Higher borrowing costs and rising energy prices also increase the risk of recession in major economies. Meanwhile, the widespread coronavirus outbreak in China, which began lifting restrictions on Covid-19 late last year, has raised new concerns for the world’s largest emerging market.

“2022 will be an exceptional year for markets in many respects, including the war in Europe, rampant inflation, the energy crisis and sharp interest rate hikes by global central banks,” said Philip Carlsson, strategist at Swedish bank SEB. “As we look to 2023, it is difficult to be overly optimistic as most of the issues remain.”

Currency markets calmed down on Monday. The pound fell 0.4% against the dollar to $1.205, while the euro fell the same range to $1.066. The Japanese yen opened 0.3% higher to 130.7 yen and fell nearly 0.3% by mid-afternoon.

This week, market watchers will be eagerly awaiting preliminary inflation announcements from several major European countries, along with US manufacturing surveys. Weekly unemployment claims figures from the US are also expected to provide further clues about the Federal Reserve’s interest rate hike plans in the world’s largest economy.

https://www.ft.com/content/ec785cd0-b6cf-4972-ad36-1c0c02c473f6 European stocks start 2023 rising after last year’s sharp decline

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