Stock Markets: Down to Davos

Stock Markets: Down to Davos

Stock Markets: Down to Davos

Signage ahead of the World Economic Forum Annual Meeting in Davos, Switzerland on Jan. 15th, 2024.

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

Asia markets dip
U.S. markets were closed Monday for Martin Luther King Day, but futures trading on Tuesday pointed to a softer start to the week as investors looked forward to more earnings from big Wall Street banks including
Goldman Sachs and Morgan Stanley. Asia markets fell, led lower by declines in Hong Kong stocks, as Japan shares cooled off from their record-breaking rally.

ECB tug of war

European Central Bank policymaker and hawk Robert Holzmann said the ECB may not deliver any interest rate cuts this year. Speaking to CNBC at the World Economic Forum in Davos, Switzerland, he said there’s a possibility of zero rate cuts this year — it’s not something markets were expecting. Still, Portugal’s central bank governor Mario Centeno said the ECB is on the right track in its fight against inflation, and the medium term trajectory is “very positive right now.”

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] Morgan Stanley picks ‘alpha’ stocks 
Alpha stocks are those that can beat the benchmark index, and Morgan Stanley picked its favorite plays in Asia. They include the Asia-Pacific region excluding Japan, and had a market capitalization of over $5 billion. Quality, value and sentiment were the basis of the U.S. investment bank’s selection.

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.

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