Flags displayed ahead of the World Economic Forum Annual Meeting in Davos, Switzerland.
Adam Galici | CNBC
This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
European markets dip
European stocks started the week on softer footing as the World Economic Forum in Davos, Switzerland kicked off Monday. Investors also digested data which showed the region’s largest economy, Germany, shrinking 0.3% in 2023. U.S. markets were closed Monday for Martin Luther King Day.
ECB could defy markets
European Central Bank policymaker and hawk Robert Holzmann said the ECB may not deliver any interest rate cuts this year. Holzmann told CNBC at the World Economic Forum in Davos, Switzerland, that he sees a possibility of zero rate cuts this year, defying market expectations.
China needs fixing
Kristalina Georgieva, managing director of the International Monetary Fund, warned China needs significant and structural reforms in order to avoid any large slowdown in growth. Georgieva told CNBC on the sidelines of Davos that the world’s second-largest economy is facing both short-term and long-term challenges.
AI out for your jobs
Almost 40% of jobs globally could be taken over by the rise of artificial intelligence, according to the International Monetary Fund. And it could also affect high-income countries more than low-income economies, the IMF warned, noting that AI could worsen inequality as well.
[PRO] Markets only care about rate cuts
Markets are now more hopeful than ever of interest rate cuts by the Federal Reserve, especially after Friday’s negative producer price index for December. But the so-called sticky inflation, that encompasses a variety of things including housing costs, is still rising. This could mean the markets and the Fed are out of sync this time on their views of rate cuts.
The bottom line
It’s typically quieter on days when the U.S. markets are shut, but action continued from across the Atlantic as the World Economic Forum in Davos, Switzerland commenced Monday.
Day 1 of the forum saw discussions on everything ranging from China and artificial intelligence, to crypto and the European Central Bank. Global leaders and thinkers raised some key points and fears about these hot topics.
China, for one, cannot seem to catch a break. IMF chief Kristalina Georgieva warned that the world’s second largest economy could see an even bigger cooldown in growth if its property and debt crisis isn’t tackled by major structural reforms.
“Ultimately, what China needs are structural reforms to continue to open up the economy, to balance the growth model more towards domestic consumption, meaning create more confidence in people, so [they] don’t save, they spend more,” Georgieva said.
The fund also reaffirmed its expectations that China’s GDP could slow, predicting a 4.6% growth this year, if the real estate sector doesn’t improve.
The IMF also touched upon AI taking over about 40% of global jobs, which could have a much larger impact on high income economies.
Its predicted about 60% of jobs in high-income nations will be impacted, 40% in emerging markets and 26% in low-income economies, given their respective exposure to AI.
— CNBC’s Vicky McKeever and Sam Meredith contributed to this story.
Source link: https://www.cnbc.com/2024/01/16/stock-markets-a-look-across-the-atlantic.html