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China Q4 growth slows to 2.9%
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U.S. stock futures inch lower
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THE PITFALLS OF HOLDING CASH (1131 GMT)
Nominal cash returns are more attractive after central banks over the world over hiked interest rates in 2022, but UBS warns of the pitfalls of holding cash.
"Saving large sums in cash in anticipation of major purchases - rather than staying invested and standing ready to borrow on your portfolio - can be a mistake for a few reasons", say UBS investment strategists in a recent note.
They highlight a "cash drag" and say the real spending power of cash savings is being eroded at close to the fastest pace in decades.
"Since 2000, cash in US dollars would have lost around 43% of its real spending power, while cash in euros would have lost 37%. A Swiss franc account would have provided zero real return."
Secondly, they point out the downside from not being in the market. Historically the picture doesn't look too good for cash.
While in any single month cash has a 40% chance of beating stocks, this drops to 13% over a decade and close to 0% over two, the UBS strategists say.
The last reason has to do with trying to time the market.
"Selling down a portfolio to fund big-ticket items is a form of market timing - even if it is based on spending needs rather than on an explicit view of the market."
And an ill-timed porfolio sale can have far-reaching ramifications.
"The second quarter of 2009 accounted for a significant share of returns for the subsequent decade. Missing this quarter alone would have lowered returns from 532% to 446% based on S&P 500 performance," they point out.
Rather than holding cash, they recommend setting aside a "liquidity strategy" funded with resources to meet a porfolio's cash flow for 3-5 years - which they say is the time that it has historically taken to fully recover from even the worst bear market losses.
FADE THE RALLY (1049 GMT)
One of the key takeaways of this month's BofA Global Research survey is that investors look inclined to "fade" this new year rally as uncertainty over rates persists, but are becoming more upbeat instead over medium-term prospects.
"Most participants do not think the market has troughed for the cycle, with 73% of respondents expecting a new low in response to monetary tightening and slowing growth," BofA writes in the European version of its highly read survey.
"Only 5% see further upside for European equities from China reopening and a fading drag from Europe's energy crisis".
Things over a longer time frame look brighter.
A 70% portion of respondents see upside for European stocks over the coming 12 months, up from 58% last month. A net 4% say they are overweight European equities in a global context, the highest reading since last February, according to BofA.
More reading on the survey here: Fund manager allocation to U.S. stocks in January collapses
STOXX DIPS FROM 9-MONTH PEAK (0927 GMT)
Equity markets in Europe got off to a soft start on Tuesday with the pan-regional STOXX 600 benchmark dipping slightly after briefly hitting a fresh 9-month high.
The FTSE 100 eased 0.2% but remained very close to its 2018 record high of 7,903.5 points. Most other country indices also fell with Germany's DAX down 0.3%.
In Paris, LVMH topped 400 billion euros in market value for the first time before succumbing to the sombre mood. After hitting a fresh record high, the stock was last down 0.3%.
Ocado was a weak spot, after numbers from its Ocado Retail joint venture with Marks & Spencer disappointed.
In sectors, tech and financials were the biggest negative weights on the STOXX. Here's your opening snapshot:
EUROPE EYES MUTED START (0745 GMT)
European shares look set to open a touch lower this morning as investors await for fresh directional leads following the new year run on optimism over China's reopening and Europe's improving macro prospects.
Better-than expected data from China failed to lift local shares and in Europe, futures on the EuroSTOXX50 were last down 0.1%. FTSE 100 contracts were steady, at short distance from their record high hit in May 2018.
Eyes later on will be on Goldman Sachs and Morgan Stanley which publish their latest quarterly numbers. In the meantime, U.S. futures pointed to a softer start on Wall Street following the long weekend.
UGLY DUCKLING (0708 GMT)
While Chinese economic data didn't come in worse than markets had feared, investors still couldn't come to terms with the scale of the economic pain being felt in the world's second-largest economy.
China's growth in 2022 slumped to one of its worst levels in nearly half a century as the fourth quarter was battered by strict COVID-19 curbs and a property market slump, data showed on Tuesday, raising pressure on policymakers to unveil more stimulus this year.
Asian stock markets dipped and the broad-based MSCI's Asia Pacific share index outside Japan retreated away from seven-month highs, and Chinese equities stocks also retreated.
European and UK stock futures, however, pointed to a steady start. The FTSE 100 is just a whisker away from its record high of 7,903.5 points.
Tuesday's batch of economic data coming up include UK jobs numbers, German inflation and Germany's ZEW economic sentiment survey.
The dollar inched up from multi-month lows, while the yen held strong near seven-month highs of 127.22 per dollar as markets bet on a potential policy shift at the Bank of Japan.
Japanese Finance Minister Shunichi Suzuki vowed to win market confidence in debt management as 10-year government bond yields broke above the upper cap of 0.5% set by the central bank.
The prospect of an imminent global recession is casting a long shadow over Davos as participants gathered this week for the opening of the World Economic Forum's annual meeting, counting the likely cost for their economies and businesses.
Two-thirds of private and public sector chief economists surveyed by the WEF expect a global recession this year, with some 18% considering it "extremely likely" - more than twice as many as in the previous survey conducted in September 2022.
And though U.S. and European airlines will benefit from pent-up demand for travel to China after its recent border reopening, route approvals, fresh COVID-19 testing rules and not enough large aircraft remain barriers to rising sales, analysts and industry officials say.
For those keen to read about one of the most dramatic periods in recent British history, former British Prime Minister Boris Johnson has struck a deal with publisher Harper Collins to write a memoir.
Key developments that could influence markets on Tuesday:
Economic data: UK Dec unemployment claimant count, Nov average earnings, Germany HICP Final Dec and Germany Jan ZEW survey
European results: Hays, Experian
Speakers - ECB policymaker Mario Centeno at Davos, ECB Board member Edouard Fernandez-Bollo participates in a webinar, Federal Reserve Bank of New York President John Williams
Central banks - Bank of Japan holds Monetary Policy Meeting (to Jan. 18)
U.S. results - Goldman Sachs, Morgan Stanley
