European Markets Rise as Investors Weigh China's Reopening and 2023 Challenges

European markets moved higher on Wednesday as investors continued to assess the prospect of China’s reopening and the possible headwinds coming down the pike in 2023. Investors are hopeful that China’s economy will rebound quickly, but are mindful of the potential challenges that could arise next year.

The Stoxx 600 index was up 0.5% in early afternoon trading, with basic resources leading the way with a 1.6% gain. Most sectors and major bourses were trading in positive territory.

European stocks were lifted on Tuesday after China confirmed that it will end its quarantine for inbound travelers on Jan. 8. This symbolizes an end to the zero-Covid policy that China has held for nearly three years. Britain’s FTSE 100 was closed for a public holiday on Tuesday, but reopened Wednesday.

As we approach the end of the year, global stock markets have had a tough time in 2022. This is due to a number of factors, including inflation caused by the fallout from Russia's war in Ukraine, and persistent Covid-19 restrictions in China. Central banks have been struggling to keep up, and this has had a knock-on effect on stock markets around the world.

Markets are now wary of the prospect of an imminent recession and a potentially prolonged period of sluggish economic growth. One economist told CNBC on Tuesday that most major economies would be “lucky” to achieve 1% GDP growth per annum for much of the next decade. This potential slowdown has caused many investors to reconsider their portfolios and investment strategies.

After Wall Street suffered more losses on Tuesday, stocks in the Asia-Pacific region mostly fell overnight. U.S. stock markets are on track for their worst year since 2008, but stock futures inched fractionally higher in early premarket trade on Wednesday.

Daniel Lacalle, chief economist at Tressis Gestion, says the global economy is heading into a decade of sluggish growth. However, he believes that a Chinese reopening will be the biggest positive for 2023.

Britain's FTSE 100 is expected to open around 28 points higher at 7,501, while Germany's DAX is set to slip by around 7 points to 13,988. France's CAC 40 is also expected to open around 4 points lower at 6,547.

According to Richard-Mark Dodds of Pure Value Metrics, there are many reasons to consider investing in shipping companies. He believes that many of these stocks are currently undervalued and offer investors a great opportunity to get involved.

This year, shares of European shipping firms AP Moeller Maersk and Hapag-Lloyd have fallen by more than 30%, while Asian carriers Cosco Shipping and Evergreen Marine have fallen even further by more than 45%.

As cyberattacks become more frequent and sophisticated, businesses are increasing their spending on cybersecurity. This allows them to better protect their data and systems from potential threats.

The recent growth in the cybersecurity sector has created opportunities for a handful of tech firms. But does that mean that these companies can sustain their earnings through a recession?

Michael Loukas, chief executive of TrueMark Investments, certainly thinks some investments are “recession-resistant.”