European markets head for mixed open as global economic outlook remains uncertain

Holly Ellyatt

European markets are heading for a mixed open Wednesday as investors remain uncertain on the economic outlook, a topic high on the agenda at the World Economic Forum in Davos this week.

CNBC will be speaking to a range of delegates at the summit on Wednesday, including the CEOs of Unicredit, Infosys, Nokia, Aramco and Credit Suisse as well as Greece and Poland’s finance ministers and Saudi Arabia’s foreign minister, among many others.

Elsewhere overnight, Asia-Pacific shares traded mostly higher even as the Bank of Japan announced no change to its yield curve control policy, while U.S. stock futures were lower on Tuesday night.

CNBC Pro: Morgan Stanley says cheaper EVs are coming — and names the global stocks set to benefit

As electric cars become increasingly popular, a new manufacturing technique that could make them more affordable is garnering interest, according to Morgan Stanley.

Some automakers are outsourcing the process which could benefit three leading Asian parts suppliers, said the Wall Street bank.

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Oil prices climb on more China reopening optimism and demand rebound

Oil prices are supported on further China reopening optimism and fuel demand, with OPEC forecasting that Chinese oil demand is on track for a bounce.

Brent crude futures rose 0.85% to $86.65 a barrel, while the U.S. West Texas Intermediate futures gained 0.91% to $80.91 a barrel.

“Chinese oil demand is on course to rebound due to the recent relaxation of the country’s zero-Covid measures,” OPEC’s monthly oil report stated.

It added that China’s first quarter oil demand will rebound from an annual decline of 0.3 million barrels per day year-on-year in 2022′s fourth quarter to 0.2 million barrels per day annualized growth.

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CNBC Pro: Thinking of jumping back into Big Tech? This investor is wary of 2 stocks in particular

Investors have been getting back into tech stocks, with the tech-heavy Nasdaq leading all three major Wall Street indexes since the start of the year, rising over 6%.

But fund manager Trent Masters of Alphinity Investment Management isn’t convinced — and told CNBC Pro Talks last week which two Big Tech stocks might be worth avoiding for now.

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Bank of America sees a later start to the recession

A recession probably won’t start now until later in 2023 as consumer spending has been stronger than expected and the Federal Reserve eases up on the intensify of its interest rate hikes, according to Bank of America.

“We push back the timing of our outlook for a mild recession in the US economy by about one quarter given durability in consumer spending on account of strong labor markets, excess saving, declining energy prices, and easier financial conditions,” the firm said in a client note. “That said, we think the headwinds will lead consumers to reduce spending and push the saving rate higher as the year progresses.”

That puts the recession into the second quarter, driven by a an investment-led slowdown leaking to consumer spending.

After pushing its benchmark borrowing rate up by 4.25 percentage points in 2022, the Fed is expected to ease back, with a 0.25 percentage point increase in February. That is forecast to be followed by additional quarter-point increases in March and May.

Rate cuts likely won’t come until 2024, the firm said.

—Jeff Cox

European markets: Here are the opening calls

European markets are heading for a mixed open Wednesday as investors remain uncertain on the economic outlook, a topic high on the agenda at the World Economic Forum in Davos this week.

The U.K.’s FTSE 100 index is expected to open 12 points lower at 7,832, Germany’s DAX up 31 points at 15,203, France’s CAC up 19 points at 7,085 and Italy’s FTSE MIB up 37 points at 25,982, according to data from IG.

CNBC will be speaking to a range of delegates at the World Economic Forum on Wednesday, including the CEOs of Unicredit, Infosys, Nokia, Aramco and Credit Suisse as well as Greece and Poland’s finance ministers and Saudi Arabia’s foreign minister, among many others.

— Holly Ellyatt

Source : cnbc