European Stocks Drop 1% as Investor Sentiment Wanes

European markets retreated on Thursday, tracking weaker global sentiment as investors gauge the economic outlook. This is a topic that is high on the agenda at the World Economic Forum in Davos this week.
‍

The Stoxx 600 was down 1.6% by mid-afternoon, with basic resources shedding 2.8% to lead losses. Almost all sectors and major bourses were in the red.
‍

CNBC will be speaking to a range of delegates at the World Economic Forum on Thursday, including the CEOs of Enel, Merck, Rio Tinto and leaders of the Netherlands and Ireland. This is a great opportunity to hear from some of the world's top leaders about the issues that are important to them.
‍

After the Dow Jones Industrial Average tumbled more than 600 points on Wednesday, trade in Europe has been lower. This is because investors took profits on some of the strong January gains, and because a disappointing December retail sales reading in the U.S. raised concerns about a recession.
‍

Shares in the Asia-Pacific region were mixed on Thursday, following the losses on Wall Street.
‍

Carlos Torres Vila, Chairman of Spanish bank BBVA, has said that the normalization of the interest rate environment in 2023 will support European banks. He has also discussed how recent data is fueling optimism, and that an increase in non-performing loans is not materializing.
‍

Allfunds Group's shares fell more than 7% to the bottom of the Stoxx 600 in early trade after HSBC downgraded the stock to "hold" from "buy" and cut its target price.
‍

Encavis, a German electrical company, fell 6% after Barclays downgraded its stock to "underweight" from "equal weight" and cut its target price.
‍

Oil prices fell sharply after a weak retail sales report raised concerns about a possible recession.
‍

Brent crude futures fell 1.21%, or $1.03 to $83.95 a barrel, while U.S. West Texas Intermediate futures declined 1.38%, or $1.10 to $78.38 a barrel.
Retail sales in the United States fell 1.1% in December, slightly more than the 1% forecast. This is the first time sales have fallen in three months.
‍

Andrew Slimmon, an experienced investor, believes that stocks will outperform most people's expectations this year. He cites the strong performance of the stock market so far this year as evidence that there is still room for growth.
‍

Slimmon, senior portfolio manager at Morgan Stanley Investment Management, told CNBC’s “Squawk Box Asia” on Friday that he thinks the stock market will do better earlier this year than what was almost universally predicted by many of the strategists on the sell side.
He also mentioned two of his favorite stocks.

After a tough year in 2022, some investors are returning to tech stocks, but investment veteran Michael Landsberg is staying away from the sector.
‍

He favors safer sectors and shares the name of five companies he expects will do well despite the current economic conditions.
‍
UBS Global Wealth Management CIO Mark Haefele has warned investors that the strong start to the year for stocks is likely to be short-lived, and that inflationary pressures may not be as severe as some have feared. Haefele's comments come as many market participants have been optimistic about the outlook for the coming year, with many expecting strong returns and inflation to remain in check. However, Haefele's warning suggests that these expectations may be overly optimistic and that investors should brace themselves for more moderate returns in the year ahead.
‍

Investors are encouraged by signs of fading inflation and a swift reopening in China, which has helped to boost risk assets at the start of 2023. A relatively warm winter has also eased concerns over energy shortages in Europe.
‍

It is still too early to say that the inflation threat has passed. While headline inflation in the US and Eurozone has continued to slow down, core inflation is still well above central bank targets.
‍

Many investors are preparing for a difficult year, as a mild recession appears to be on the horizon.
He names one stock that meets that criterion.
‍

‍

European markets are heading for a negative open Thursday as investors remain uncertain on the economic outlook. This is a topic that is high on the agenda at the World Economic Forum in Davos this week.
‍

According to data from IG, the U.K.’s FTSE 100 index is expected to open 37 points lower at 7,793, Germany’s DAX 69 points lower at 15,125, France’s CAC down 35 points at 7,052 and Italy’s FTSE MIB down 77 points at 25,939.
‍

CNBC will be speaking to a range of delegates at the World Economic Forum on Wednesday, including the CEOs of Enel, Merck, Rio Tinto and leaders of the Netherlands and Ireland. This is a great opportunity to hear from some of the world's top leaders about the issues that are affecting the global economy.
‍

Keep up with our latest coverage by following us here.