US AND EUROPE EQUITY REMAIN FLAT
US stock futures tracking the broader market were down roughly 0.5% on Tuesday, putting Wall Street on track to start a holiday-shortened week lower as investors await a slew of earnings reports for clues on how corporate America performed against macro headwinds. Last week, JPMorgan, Bank of America, Citigroup, and Wells Fargo turned in mixed fourth-quarter results, with the nation's largest banks reporting better-than-expected numbers but issuing recession warnings. Investors now look ahead to more reports, including those from Morgan Stanley and Goldman Sachs. Equities have been enjoying a wave of respite in 2023 so far, with sentiment lifted by optimism about China's reopening and signs of a slowdown in inflation in the US and Europe.
European shares traded near the flat line on Tuesday, as investors paused for breath following a recent rally that sent the STOXX 600 to nine-month highs and Germany's DAX 40 to fresh 11-month highs. Meanwhile, traders also assessed a batch of economic data and quarterly earnings reports. Germany's inflation rate was confirmed at 8.6%, down for a second straight month from October's all-time high, suggesting cost pressure in Europe's largest economy eased in December; while the UK jobs report showed the pace of pay growth accelerated in the three months to November to the fastest since records began in 2001 excluding jumps during the COVID-19 period. Germany's ZEW economic sentiment survey will also be in the spotlight. Elsewhere, recession fears took center stage after survey released at the Davos summit showed that two-thirds of private and public sector economists expected a global recession this year.
The FTSE 100 was little changed on Tuesday, hovering near record levels at around 7,850 points, as investors assess the latest jobs report. Data showed UK wages rose the most on record when excluding the height of the pandemic, but real earnings continued to drop due to high inflation. Meanwhile, investors also focus on the World Economic Forum in Switzerland where recession fears dominated the headlines.
The CAC 40 index fell about 0.2% to the 7,029 level, tracking its European peers lower, as investors monitor China's slowing growth and other data for Europe, including an upbeat German investor morale and await more earnings reports from Wall Street. Domestically, the impacts of Macron's announcement about the extension of the retirement age continue, with main labor unions in the country announcing a nationwide day of strike action on Thursday. On the data front, government budget deficit narrowed to EUR 159 billion in January-November of 2022 from EUR 181 billion in the corresponding period of the previous year. Among single stocks, Safran (+1.7%) and Thales (+1.6%) were the top performer, while Engie (-3.8%), Alstom SA (-2.4%) and Cap Gemini (-1.9%) posted the biggest losses. China-exposed Kering was down nearly 1%.
The FTSE MIB index was slightly lower around 25,840 on Tuesday, pausing for breath after a four-day rally that sent the index to the highest level since last February. Investors were assessing a batch of important economic data from China and the Eurozone, as well as quarterly corporate earnings. The focus was also on the World Economic Forum annual meeting in Davos and speeches from policymakers of the ECB and the Federal Reserve. On the domestic data front, final data showed confirmed Italy's inflation rate moderated to 11.6% in December from 11.8% in November. Among single stocks, Leonardo and Tenaris were leading the gains, up 4% and 3.1%, respectively. Also, Telecom Italia was up nearly 2%, after the CEO of its biggest shareholder Vivendi announced his resignation from the board of directors of the Italian telecommunications giant with immediate effect, as it seeks governance changes. On the opposite side, Finecobank (-2.4%) and Iveco Group (-1.9%) posted the biggest losses.
The Ibex edged lower to 8830 on Tuesday, risking the second consecutive session of decline, as traders assessed China's slowing GDP growth, which reached the lowest in 46 years(excluding 2020), and other European data, including upbeat German investor morale. The market's focus is on the World Economic Forum annual meeting in Davos and speeches from policymakers of the ECB and the Federal Reserve. Domestically, Spain's public debt expanded, marking a record high of 1,506 billion euros or 116% of GDP. Most stocks entered the negative territory, with the biggest losses coming from Merlin Properties (-1.76%) and Enagas (-1.54%). In contrast, solid gains were registered by Sacyr (+1.54%).
