Investors Cautious as Euro Zone Inflation Data Analyzed Ahead of U.S. Jobs Report

The Stoxx 600 index was up 0.2% in early afternoon trading, with basic resources stocks up 1.2% while financial services stocks fell 0.5%.

‍
Inflation in the euro zone dropped for a second consecutive month in December, according to preliminary data from the European statistics agency, Eurostat. Headline inflation, which includes food and energy costs, came in at 9.2% year-on-year in December. Inflation rates in November contracted slightly for the first time since June 2021, representing a headline inflation rate of 10.1%. This is a positive sign for the economy, as it indicates that prices are beginning to stabilize after months of increases.

‍
Investors may be hoping that falling inflation will pave the way for the European Central Bank to temper its aggressive monetary policy tightening cycle and limit the continent’s economic pain. However, analysts do not expect the ECB to pivot just yet.
The minutes from the last meeting of the U.S. Federal Reserve were published earlier this week, and they showed that policymakers were seemingly unmoved from their hawkish position. They are looking to bring inflation back down toward target.

‍
Investors will be closely watching Friday’s December nonfarm payrolls report for further indications as to the path of monetary policy. The report is expected to show that the economy added jobs last month, which would be a positive sign for the outlook. However, wage growth is expected to remain relatively subdued, which could give the Fed more reason to keep interest rates low.
Asian stocks rose overnight, with South Korea’s Kospi index leading the way, while U.S. stock futures pointed to a positive open on Wall Street as traders awaited the key jobs report.

‍
In a recent interview, Emmanuel Cau, head of European equity strategy at the bank, discussed his outlook for European markets in 2023. Cau noted that he expects continued growth in the region, driven by strong fundamentals and positive demographics. He also highlighted several potential risks to the outlook, including Brexit and the possibility of a global economic slowdown. Overall, Cau remains optimistic about the future of European markets.
Fahad Kamal, chief investment officer at Kleinwort Hambros, believes that oil prices will continue to rise in 2023. He expects more upside than downside in oil prices over the next year.

‍
Inflation in the euro zone continued to fall in December, marking the second consecutive month of decline. This is welcome news for consumers and businesses alike, as it provides relief from rising prices. However, policymakers will be closely monitoring inflation levels to ensure that they remain in line with the ECB's target of close to, but below, 2%.

‍
Headline inflation in the European Union fell slightly in December, according to preliminary data from Eurostat. The headline inflation rate, which includes food and energy costs, came in at 9.2% year-on-year in December, down from 10.1% in November. This is the first time headline inflation has fallen since June 2021.
Analysts say that despite further signs that inflation is easing, it is still too early to celebrate. They do not expect the region's central bank to make any major changes at this time.

‍
Silvia Amaro is a Brazilian journalist who has worked for some of the country's most prestigious news outlets. She is currently a reporter for Folha de S. Paulo, one of Brazil's largest newspapers. Amaro has won several awards for her work, including the Prêmio Esso de Jornalismo in 2013. According to Goldman Sachs, many under-the-radar stocks are key to a green energy transition, and the firm expects them to take off in 2023. This year, the focus of investment in the clean energy sector will shift from large stocks to smaller supply chain firms, according to a Wall Street bank. This marks a change from the past decade, when investing in large clean energy stocks was the trend.

‍
The investment bank has identified seven stocks in the Europe, Middle East, and Asia regions that it believes will benefit from the new trend.
Scott Chronert of Citi expects a mild recession in the first half of this year. He has revealed three strategy calls that could help investors trade the downturn.
He told CNBC that there are three "top conviction calls" that can help investors navigate the macro environment. These calls can help investors make decisions about where to put their money.

‍
After a strong performance in 2022, energy stocks have had a slow start to the year. However, many analysts believe that the sector still has potential for growth in the coming months.

‍
But veteran investor Louis Navellier is unfazed. He believes the sector is set for another bumper year in 2023, and has a number of stock picks to play it. Navellier is confident that the sector will continue to grow in the coming year, and has identified a number of stocks that he believes will perform well.
As a Pro subscriber, you can read more articles on our site. This gives you access to exclusive content that you can't find anywhere else.

‍
Britain's FTSE 100 is expected to open around 18 points higher at 7,651, while Germany's DAX is seen around 38 points higher at 14,474. France's CAC 40 is also expected to gain around 18 points to 6,780.