European markets have started 2019 with losses, and the DAX is down slightly in the Wednesday session. Currently, the index is at 10,547, down 0.11% since the year-end close on Monday. On the release front, Germany and the Eurozone posted manufacturing PMIs, with readings of 51.5 and 51.4, respectively. Both readings matched the forecast.
The ongoing global trade war has dampened economic growth and hurt investor confidence. With investors reading in their morning newspapers that equity markets suffered their worst year since 2008, risk apprehension remains high as we begin the New Year. However, one positive development in December was the announcement that U.S. and Chinese delegations are set to meet next week and tackle the trade issues that have sparked a serious rift between the world’s two largest economies. The talks are critical, as the U.S. has said that it will impose heavy tariffs on Chinese products on March 1, but agreed to suspend the move while talks are ongoing. Earlier in the week, President Trump said that ‘big progress’ had been made with China, but with the sides yet to meet face-to-face, the markets are not putting much stock in Trump’s remarks.
Global stock markets have taken investors on a roller coaster ride in recent weeks. The sharp volatility has shaken investors, who have flocked to safe-assets such as gold and the Japanese yen at the expense of equities. In the eurozone, policymakers begin the year with serious headaches, as the markets brace for soft numbers for the fourth quarter. As well, the Italian budget crisis has not been resolved and Brexit will be back in the headlines, as the British parliament will vote on the withdrawal agreement in mid-January. With plenty of hot-spots both domestically and abroad, traders can expect volatility from European stock markets in the coming weeks.
