European Markets Open Weaker as Asian Stocks Retreat
European markets opened weaker on Monday, following a decline in Asian stocks. This comes after Wall Street experienced its worst week since Halloween. The futures for the S&P 500 and the Dow Jones Industrial Average also showed a slight decrease. However, there is hope that an agreement reached by Congressional leaders on overall spending levels for the current fiscal year could help avoid a partial government shutdown later this month.
Oil prices also fell as Saudi Arabia cut oil prices to Asian markets to their lowest level in 27 months. This decline in oil prices could have an impact on the global economy.
In Germany, the DAX gained 0.1 percent, with data showing a 3.7 percent increase in exports in November. However, there was only a feeble increase in factory orders, indicating that the economy is still far from a solid recovery. The CAC 40 in Paris slipped 0.1 percent, and Britain’s FTSE 100 lost 0.3 percent.
Asian markets also saw a decline, with Hong Kong’s Hang Seng sinking 1.9 percent and the Shanghai Composite index slipping 1.4 percent. Troubled developer China Evergrande’s electric vehicle company announced that its vice chairman had been detained on suspicion of unspecified “crimes.” Additionally, China announced sanctions against five American defense-related companies in response to U.S. arms sales to Taiwan and U.S. sanctions on Chinese companies and individuals.
South Korea’s Kospi shed 0.4 percent, Australia’s S&P/ASX 200 lost 0.5 percent, Taiwan’s Taiex gained 0.3 percent, and the SET in Bangkok was 0.6 percent lower. Markets in Japan were closed for a holiday.
Investors are now awaiting inflation reports from Japan, the U.S., and China later this week.
On Friday, Wall Street saw a slight increase, with the S&P 500 rising 0.2 percent. However, it still experienced its first losing week in the last 10. The Dow Jones Industrial Average and the Nasdaq composite also saw slight gains.
Treasury yields in the bond market swung sharply after the latest monthly jobs report showed unexpected acceleration in hiring in December. This positive news for workers could also lead to concerns about inflation.
Overall, there is optimism on Wall Street for a perfect landing for the economy, where it slows just enough through high interest rates to control inflation but not enough to cause a recession.
In other news, U.S. benchmark crude oil slipped to $73.15 per barrel, and the U.S. dollar fell to 144.50 Japanese yen.
