With a markets showing strength in January the NEI team looks at five surprises that helped drive global markets higher.
China’s abrupt re-open provides near term boost
In a surprise move, the Chinese government reopened the country on January 8th. Most observers were expecting a more measured easing after enforcing the country’s zero-Covid policy in a draconian fashion for three years. Market sentiment turned positive overnight, as the re-opening provides a path to a sustainable recovery in China’s domestic economy.
Europe’s much welcomed warm winter
With the exception of ski hills operators, Europeans welcomed the record-breaking temperatures this January, which gave the energy crisis in the region much needed breathing room. Gas prices have collapsed over 80% from last summer’s highs as lower demand for heating has left gas reserve at a 78% of capacity vs 5-year average of 58%, helping to relieve inflationary pressure.
Economic resilience surprising to the upside
The global economy is in better shape than expected, as the most recent economic data has been beating markets expectations. Canada beat expectations on year-over-year GDP growth at 2.8%, with resilience in retail sales ex autos. Europe has also been showing resilience since the last quarter of 2022, Eurozone’s GDP grew by a positive 0.3%, when economists expected a contraction of 0.2%. This resilience provides a strong boost to the markets.
