FTSE 100 – ReportWire

CNBC Daily Open: Strong earnings, macro conditions propelling stocks up

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The Morgan Stanley headquarters in New York, US, on Wednesday, Dec. 27, 2023.

Angus Mordant | Bloomberg | Getty Images

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

Markets rise on upbeat earnings
U.S. stocks resumed their advance Wednesday, as Morgan Stanley and United Airlines earnings topped estimates. Asia-Pacific markets traded mixed Thursday. The CSI 300 real estate index fell nearly 7% even as Beijing announced new measures to support the industry.

Follow Decision Time for the ECB live
Market watchers are expecting the European Central Bank to cut rates by 25 basis points at its meeting later today. If that projection pans out, it’d be the third time the ECB’s cutting rates this year. Catch today’s action on Decision Time, CNBC’s live show analyzing the decision, starting 1 p.m. BST.

New support measures for real estate
China’s housing ministry said Thursday it’ll broaden its “whitelist” initiative to all commercial housing projects, which aims to complete the construction of unfinished homes. The ministry also announced that bank loans to developers will be speeded up and nearly double to 4 million trillion yuan by the end of 2024, from the 2.23 trillion yuan already approved.

Potential probe of Intel
Intel is potentially facing a security review by the Cybersecurity Association of China. Officials allege that Intel’s CPU chips possess vulnerabilities in security management and flaws in product quality. CSAC also accused Intel of using remote management features to surveil users.

[PRO] A shining sector that’s not tech nor utilities
Big Tech stocks, fueled by excitement over generative artificial intelligence, have been responsible for most of this year’s rally in the market. Gen AI is powered by energy-hungry data centers, which benefits the utilities sector. But there’s a new group of stocks that’s fast becoming one of the best-performing sectors for the year.

The bottom line

The pullback in stocks on Wednesday was brief, like a marathoner pausing to drink before pounding the road again.

“Yesterday’s weakness does not change the intermediate and long-term uptrends, and we believe it will prove to be just a pullback within the context of a longer-term uptrend,” Piper Sandler said in a note.

After dipping from its 43,000 level on Tuesday, the Dow Jones Industrial Average rose 0.79% Wednesday to break that barrier again, closing at 43,077.70.

The S&P 500 climbed 0.47% and the Nasdaq Composite added 0.28%.

Markets are basking in the glow of a positive earnings season so far. Around 80% of the 50 S&P companies that have posted earnings have topped expectations, according to FactSet data.

Morgan Stanley, for one, reported third-quarter figures that surpassed earnings and revenue estimates. The bank’s profit jumped 32% from a year ago, far outstripping the LSEG estimate and topping several other big banks’ income growth.

The investment banking business was a main source of profit for Morgan Stanley. Supported by the U.S. Federal Reserve beginning its rate-cutting cycle, initial public offerings and mergers and acquisitions are emerging from hibernation, injecting fresh life into Wall Street banks.

Morgan Stanley popped 6.5% after results. The SPDR S&P Bank ETF has jumped more than 6% over the past five trading days. In another sign of the rally broadening, the banking ETF has outstripped the S&P 500’s climb of less than 1% during the same period.

“We anticipate the macroeconomic and earnings environments to remain favorable,” UBS says, “which supports staying invested in equities.”

With monetary policy easing, the economy staying strong and inflation cooling — import prices dipped 0.4% for September, according to the U.S. Labor Department — stocks look like they have stamina to keep going higher.

– CNBC’s Hugh Son, Alex Harring, Jeff Cox, Lisa Kailai Han and Jesse Pound contributed to this story.

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October 16, 2024

CNBC Daily Open: Strong earnings, macro conditions driving stocks higher

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The Morgan Stanley headquarters in New York, US, on Monday, Oct. 14, 2024.

Michael Nagle | Bloomberg | Getty Images

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

The bottom line

The pullback in stocks on Wednesday was brief, like a marathoner pausing to drink before pounding the road again.

“Yesterday’s weakness does not change the intermediate and long-term uptrends, and we believe it will prove to be just a pullback within the context of a longer-term uptrend,” Piper Sandler said in a note.

After dipping from its 43,000 level on Tuesday, the Dow Jones Industrial Average rose 0.79% Wednesday to break that barrier again, closing at 43,077.70.

The S&P 500 climbed 0.47% and the Nasdaq Composite added 0.28%.

Markets are basking in the glow of a positive earnings season so far. Around 80% of the 50 S&P companies that have posted earnings have topped expectations, according to FactSet data.

Morgan Stanley, for one, reported third-quarter figures that surpassed earnings and revenue estimates. The bank’s profit jumped 32% from a year ago, far outstripping the LSEG estimate and topping several other big banks’ income growth.

The investment banking business was a main source of profit for Morgan Stanley. Supported by the U.S. Federal Reserve beginning its rate-cutting cycle, initial public offerings and mergers and acquisitions are emerging from hibernation, injecting fresh life into Wall Street banks.

Morgan Stanley popped 6.5% after results. The SPDR S&P Bank ETF has jumped more than 6% over the past five trading days. In another sign of the rally broadening, the banking ETF has outstripped the S&P 500’s climb of less than 1% during the same period.

“We anticipate the macroeconomic and earnings environments to remain favorable,” UBS says, “which supports staying invested in equities.”

With monetary policy easing, the economy staying strong and inflation cooling — import prices dipped 0.4% for September, according to the U.S. Labor Department — stocks look like they have stamina to keep going higher.

– CNBC’s Hugh Son, Alex Harring, Jeff Cox, Lisa Kailai Han and Jesse Pound contributed to this story.

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October 16, 2024

Europe stocks close 2.2% lower amid global downturn as volatility index spikes to Covid-era high

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LONDON — European markets fell sharply at the start of the new trading week, though pared losses towards the end of the session amid a global stock sell-off.

The regional Stoxx 600 index closed 2.17% lower, pulling back from declines of more than 3% as the technology sector clawed back some ground to end 0.9% lower.

All sectors and major bourses nonetheless finished in the red, with utilities and oil and gas stocks both losing over 3%.

Strategists pointed to several causes for the downturn across Europe, Asia and the U.S. which began last week, including fears of a U.S. recession and rapid Federal Reserve Rate cuts, the recent hawkish pivot by the Bank of Japan and crash in the yen “carry trade,” and an ongoing re-rating of the tech sector.

The VIX, a measure of expected market volatility, jumped more than 100% to 64.06 during Monday trade before cooling to around 35, still its highest level since 2020.

U.S. stocks saw steep losses through the morning, with the Dow Jones Industrial Average losing nearly 1,000 points, or 2.5%, as the tech-heavy Nasdaq Composite fell 2.6%.

Asia-Pacific markets had led the sell-off on Monday. Japan stocks entered a bear market, with the Nikkei 225 losing 12.4% to log its worst day since 1987.

The broad-based Topix also saw a rout, tumbling 12.23%, while heavyweight trading houses such as Mitsubishi, Mitsui and Co., Sumitomo and Marubeni all plunged more than 14%.

The yen, meanwhile, rose to its highest level against the dollar since January as U.S. Treasurys gained.

On the data front, demand for U.K. services rose in July, increasing to 52.5 from 52.1 the previous month, fresh purchasing managers’ index data showed Monday. Corresponding data for Italy and Spain also pointed to sustained growth in the sector but at a slower pace than previous months.

Stock picks and investing trends from CNBC Pro:

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August 5, 2024

French stocks rise 0.5% after left-wing coalition clinches surprise election win

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LONDON — French stocks moved higher on Monday as markets reacted to a surprise win for the left in the country’s parliamentary election.

The CAC 40 erased earlier losses to rise 0.5% by 10:00 a.m. London time (5 a.m. ET). The euro was flat against the dollar, and trading in bond markets was also relatively muted.

The U.K.’s FTSE 100 was steady, while Germany’s DAX was 0.43% higher and the FTSE MIB was up around 1%. The pan-European STOXX 600 was 0.3% in the green.

France’s left-wing New Popular Front won the largest number of seats in this weekend’s parliamentary elections, scuppering an expected surge for the far-right. However, the coalition failed to secure an absolute majority, early data showed, leaving markets digesting the possibility of a hung parliament.

François Digard, head of French equity research at Kepler Cheuvreux, said a hung parliament was what the market was expecting.

“You have a hung parliament as expected so last week, the market has played this out … It was just expected to be more right-wing and at the end it is left-wing,” he told CNBC on Monday.

Deutsche Bank strategists added that markets will be suspicious of the New Popular Front’s “fiscally aggressive” spending and taxation plans.

“Last night the far-left were already talking about wealth taxes and increases on taxes on corporates which won’t be market-friendly. However trying to build a government that has any kind of stability looks a very high bar this morning. Political paralysis for the next 12 months seems the most likely outcome,” they added.

It comes after a general election in Britain last week, in which the opposition Labour Party win a landslide victory, unseating the Conservatives after 14 years.

In corporate news, soft drinks maker Britvic has agreed a takeover bid of £3.3 billion ($4.2 billion) from Carlsberg, at an offer of 1,290 pence per Britvic share. This was an improved bid from Carlsberg which first offered 1,200 pence per share but was rejected.

There are no major corporate earnings due out on Monday. It’s also quiet on the data front, with just German trade data due.

In Asia-Pacific, stocks were mixed Monday. In the United States, futures ticked lower as investors looked ahead to inflation data for hints on this year’s market rally and the next steps by the Federal Reserve. The June consumer price index is due Thursday, with producer price index data due Friday.

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July 8, 2024

Fat Cat Thursday: UK CEO pay already exceeds average worker salary for the year

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Skyscrapers in the Canary Wharf financial, business and shopping district in London, UK.

Bloomberg | Bloomberg | Getty Images

The average FTSE 100 CEO will have earned more this year than the median full-time worker’s annual salary by 1 p.m. London time on Thursday, according to estimates from the High Pay Centre think tank.

The U.K.’s top bosses will surpass the milestone an hour earlier than they did in 2023, the calculations suggest, while leading bankers will exceed it on Jan. 17.

The calculations are based on the High Pay Centre’s analysis of the most recent available CEO pay figures from British blue chip companies’ annual reports, compared with government data on pay levels across the U.K. economy.

Median FTSE 100 CEO pay (excluding pension) currently stands at £3.81 million ($4.84 million), 109 times the median full time worker’s pay of £34,963, the think tank said. This represents a 9.5% increase on median CEO pay levels as of March 2023, while the median worker’s pay has increased by 6%.

“Lobbyists for big business and the financial services industry spent much of 2023 arguing that top earners in Britain aren’t paid enough and that we are too concerned with gaps between the super-rich and everybody else,” said High Pay Centre Director Luke Hildyard.

“They think that economic success is created by a tiny number of people at the top and that everybody else has very little to contribute. When politicians listen to these misguided views, it’s unsurprising that we end up with massive inequality, and stagnating living standards for the majority of the population.”

Leading business and finance figures in the U.K. in 2023 called for an increase in remuneration for British CEOs. The High Pay Centre highlighted that in December, Legal and General Investment Management adjusted its executive pay guidelines to permit companies it invests in to offer more generous incentive payments.

In May, London Stock Exchange CEO Julia Hoggett argued that pay levels for top executives were too low, and pose a risk to the U.K.’s ability to attract and retain elite domestic and international talent, in turn jeopardizing the economy.

“And yet, very often, this talent objective is hampered by the advice and analysis of the proxy agencies and some asset managers voting against executive pay policies even when those pay levels are significantly below global benchmarks,” she said in a post on the exchange’s website.

“Often the same proxy agencies and asset managers that oppose compensation levels in the UK support much higher compensation packages in different jurisdictions, notably in the U.S.”

S&P 500 CEOs stateside earned an average of $16.7 million in 2022 compared to an average full-time worker’s annual salary of $61,900, according to the American Federation of Labor and Congress of Industrial Organizations.

Hoggett said a “constructive discussion with all stakeholders about a topic that tends to generate emotion and strong views” was essential if the U.K. is to be placed on a competitive footing internationally.

‘Obscene levels of pay inequality’

The Trades Union Congress, which represents 48 member unions across the U.K., said Thursday’s figures showed Britain’s ruling Conservative government was presiding over “obscene levels of pay inequality.”

“While working people have been forced to suffer the longest wage squeeze in modern history, City bosses have been allowed to pocket bumper rises and bankers have been given unlimited bonuses,” TUC General Secretary Paul Nowak said in a statement.

A spokesperson for the U.K. Treasury was not immediately available to comment when contacted by CNBC.

U.K. workers and households have endured a historic cost of living crisis over the last two years, while the tax burden continues to grow and is expected to hit a post-war high of 37.7% of gross domestic product in 2028/29, according to the independent Office for Budget Responsibility. This is despite recently announced cuts to National Insurance tax on workers.

Sharon Graham, general secretary of Unite, one of the U.K.’s largest unions with over 1.2 million members, said the union would “not tolerate employers who want one rule for the bosses and another for the workers.”

“These CEOs need to get their snouts out of the trough and give their employees a proper piece of the pie. Unite is on a mission to make work pay in this country and where employers have ability to pay, we will continue to demand and win proper pay rises for our members,” she added.

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January 4, 2024

European markets muted as global stocks search for new highs

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The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, November 13, 2023.

Staff | Reuters

LONDON — European stocks were little changed on Thursday as global markets search for new record highs to close out the year.

The pan-European Stoxx 600 index hovered around the flatline by mid-morning, with health care stocks adding 0.5% while oil and gas stocks dropped 0.6%.

The continental blue chip index was last trading around the 478.66 mark, not far below the index’s record closing high of 483.44 notched in November 2021.

Stateside, U.S. stock futures were little changed in early premarket trade after another day of modest gains on Wall Street, with the S&P 500 benchmark also closing in on a record high.

Shares in Asia-Pacific were mostly higher overnight, with markets in mainland China and Hong Kong leading gains and Australia’s S&P/ASX 200 hovering near a two-year high. Japan’s Nikkei 225 and Topix bucked the trend to post slight declines.

Trading volumes are expected to be thin during the last two days of the trading year, with fewer data points on the economic calendar and all major central bank meetings out of the way.

In terms of individual share price movement in Europe, Spanish utility company Endesa fell 3% in early trade to the bottom of the Stoxx 600, while Danish biotech Zealand Pharma gained 3% to lead the index.

Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.

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December 28, 2023

CNBC Daily Open: Markets see worst day in months on FedEx slump

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A FedEx truck and cars commute on Highway 101 during heavy rain in San Francisco Bay Area of California, United States on December 20, 2023.

Tayfun Coskun | Anadolu | Getty Images

This report is from today’s CNBC Daily Open, our new, 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

Worst day in months
U.S. markets fell Wednesday, with all major indexes snapping their winning streaks in one of their worst trading sessions in months. Still, U.S. Treasury yields continued to dip. Europe’s Stoxx 600 climbed 0.19%, while the U.K.’s FTSE 100 jumped 1.02% to hit a three-month high on positive inflation news.

UK inflation’s looking OK
U.K. inflation slid to 3.9% in November, the lowest annual reading since September 2021. That figure’s lower than the 4.4% economists had expected, and the 4.6% reading in October. Moreover, prices actually fell 0.2% for the month, compared with estimates of a 0.1% rise. Core consumer price index was also lower than expected, prompting a sharp fall in U.K. 10-year gilt yield.

Citi shutters another unit
Citigroup is closing its global distressed-debt group, CNBC has learned from people with direct knowledge of the move. That closure follows last week’s announcement that the bank’s shuttering its municipal-bond trading operations. CEO Jane Fraser is in the process of restructuring Citigroup, exiting businesses with poor returns to help the bank hit its performance targets.

Tesla’s the “it” stock
Out of all securities on the U.S. market, Tesla’s on pace to attract the most amount of individual investor dollars in 2023, according to data from Vanda Research. That means inflows into the stock will surpass the SPDR S&P 500 ETF Trust, which tracks the largest index in the world. To put Tesla’s popularity in perspective, it wasn’t even among the top 20 stocks retail investors bought before 2019.

[PRO] Due for a breather
Despite the massive rally in markets last week — and, indeed, since November — several strategists are cautioning their clients to be defensive, especially when it comes to the new year. The “rally is ripe for a breather,” wrote one Wall Street strategist, because earnings might falter in 2024.

The bottom line

FedEx‘s performance is often seen as a bellwether for the general economy. When businesses ship fewer parcels, it tends to indicate a slowdown in economic activity.

So, when FedEx issued a worse-than-expected forecast for its current fiscal year, and reported disappointing second-quarter results, it wasn’t solely a warning for investors in the company. FedEx, whose stock sank 12.05%, may also signal trouble for the broader market, according to Wolfe Research.

″[W]hile volatile at times, the correlation between FDX and the S&P has been a solid one,” Wolfe Research managing director Rob Ginsberg wrote on Monday.

“Now, it probably won’t derail the year-end melt-up, but given the multitude of overbought conditions and stretched indicators, a market pricing in perfection just got a bit of troubling news.”

And markets indeed had a bad day. The S&P 500 tumbled 1.47%, the most it’s lost in one session since September. Meanwhile, the Dow Jones Industrial Average fell 1.27% and the Nasdaq Composite lost 1.5% — both indexes snapped their nine-day winning streaks in their worst day since October.

That disappointing showing, however, doesn’t necessarily mean the start of a prolonged slide for markets. Treasury yields are still dipping, which tends to boost stocks. There were also pockets of strength amid the sell-off yesterday. Alphabet, for instance, gained 1.24% and touched a new 52-week high during the session. Consumer confidence in December also picked up, according to the Conference Board.

Keith Buchanan, senior portfolio manager at Globalt Investments, said market losses were “more technical than fundamental,” meaning it was more the breakneck pace at which stocks had been rallying that posed a risk, rather than the their intrinsic value.

“Markets were becoming overbought, and a pullback like this is natural given those conditions,” Buchanan said.

As any recipient of a FedEx package knows, a delayed delivery isn’t the end of the world; you just have to move past the hiccup. The same goes for markets.

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December 20, 2023

UK inflation slide fuels rate cut bets and jolts markets

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LONDON, UK – Sept. 2021: People seen dining outdoors in Soho in London in September 2021.

SOPA Images | LightRocket | Getty Images

LONDON — U.K. inflation fell by more than expected to hit 3.9% in November, in the lowest annual reading since September 2021.

Economists polled by Reuters had expected a modest decline in the headline consumer price index to 4.4%, after the 4.6% annual reading of October surprised to the downside by dropping to a two-year low.

Month on month, the headline CPI fell by 0.2%, compared with a consensus forecast of a 0.1% increase.

The Core CPI — which excludes volatile food, energy, alcohol and tobacco prices — came in at an annual 5.1%, well below a 5.6% forecast.

The surprisingly large falls prompted a spike in bets that the Bank of England will cut interest rates in 2024, which manifested in a sharp fall in British bond yields.

The yield on the U.K. 10-year government bond, or gilt, sunk to an eight-month low, dropping 11 basis points to around 3.54%. Yields move inversely to prices. Meanwhile, the U.K.’s FTSE 100 was the only major European stock index in positive territory on Wednesday, climbing 0.8% by midmorning London time.

The Office for National Statistics said the largest downward contributions came from transport, recreation and culture, and food and nonalcoholic beverages.

The Bank of England last week maintained a hawkish tone as it kept its main interest rate unchanged at 5.25%. The Monetary Policy Committee reiterated that policy is “likely to need to be restrictive for an extended period of time.”

The central bank ended a run of 14 straight interest rate hikes in September, as policymakers looked to wrestle inflation back down toward the bank’s 2% target from a 41-year high of 11.1% in October 2022.

U.K. Finance Minister Jeremy Hunt cheered the Wednesday figures and said the country was “starting to remove inflationary pressures from the economy.”

“Alongside the business tax cuts announced in the Autumn Statement this means we are back on the path to healthy, sustainable growth,” he said in a statement.

“But many families are still struggling with high prices so we will continue to prioritise measures that help with cost of living pressures.”

Significant fall ‘undermines’ Bank of England caution

The Bank of England has repeatedly pushed back against market expectations for significant cuts to interest rates in 2024, noting last week that “key indicators of U.K. inflation persistence remain elevated.”

Suren Thiru, economics director at ICAEW, said the “startling” fall in inflation recorded Wednesday will reassure households that there is a “light at the end of the tunnel,” with easing core CPI figures showing that underlying price pressures are relenting.

“The likely squeeze on wages from rising unemployment and a stagnating economy should help to continue to keep them on a downward trajectory,” he said by email.

The UK is likely to tip into a recession next year, analyst says

“These inflation numbers suggest that the Bank of England is too pessimistic in its rhetoric over when interest rates could start falling. A deteriorating economy could push the Bank to start loosening policy by the Autumn, particularly if inflationary pressures continuing easing.”

A ‘glimmer of relief’

Richard Carter, head of fixed interest research at Quilter Cheviot, said the latest inflation print adds to a sense of “cautious optimism” in the U.K. relative to the cost-of-living crisis and bond market chaos of last year.

Despite the drop in CPI, he noted that the broader economic picture remains “complex, marred by stagnation and subdued growth prospects.”

The U.K. economy contracted by 0.3% month on month in October, after flatlining in the third quarter.

“This stagnation, leaving the output no higher than it was in January, paints a picture of an economy struggling to rebound from a series of unprecedented challenges,” Carter said over email, while acknowledging that the pace at which inflation is slowing offers a “glimmer of relief” for households.

“The pressures are manifold – from the cost of living crisis, volatile energy markets, Brexit aftershocks, to enduring productivity issues. These factors have collectively dampened economic prospects and consumer confidence.”

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December 19, 2023

Standard Chartered shares slide 12% as China losses hit earnings

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Standard Chartered shares slid Thursday as the bank’s big bet on China hit a stumbling block, leading to significant losses in the country.

Shares of the Asia-focused bank tanked as much as 17% in early deals, sparking a temporary halt in trade, Reuters reported. The stock was 11.7% lower by 10:15 a.m. London time.

The U.K.-headquartered bank reported pre-tax profit of $633 million for the third quarter — a 54% drop from the same period last year. The result was hit by the bank slashing the value of its investment in China Bohai Bank by $697 million.

Standard Chartered also announced a credit impairment charge of $294 million — up $62 million on the year — including a $186 million charge relating to the China commercial real estate sector.

Standard Chartered shares

Standard Bank Chief Financial Officer Andy Halford on Thursday told CNBC’s “Squawk Box Europe” that the “overall performance of the bank is very strong,” despite the China news.

Halford noted that China’s commercial real estate sector “clearly has been problematic,” but said that GDP in the country is forecast to bounce back around 5% within the next two to three years.

“What we’re seeing is probably a slower recovery post-Covid than in some countries. But it’s a huge population to mobilize after such a big event,” Halford said.

“Most countries would be more than happy to have that kind of growth level,” Halford said. “So we are very, very much of the view that this is a period that we need to go through. We’ll stick with it [and] as the economy gets going, then that should be good with us and should be good for others.”

China’s economic recovery has broadly disappointed since the end of the Covid-19 pandemic, although its third-quarter growth came in stronger than expected, boosting hopes that things could be about to turn around.

‘A blessing and a curse’

Richard Hunter, head of markets at online investment platform Interactive Investor, said Standard Chartered’s China issues were an “inevitable concern,” but said that the bank was adequately capitalized to withstand the challenges.

“China remains both a blessing and a curse for Standard, with the country’s faltering economic recovery weighing heavily on these results,” he said.

The impairment provisions have “driven a bus through earnings,” Hunter said, but added that excluding the provisions, the performance is “rather less harrowing” on an underlying basis.

“After some years in the doldrums after previously having been the darling of the UK banking sector, Standard has for the most part had something of a return to form,” he said in a note Thursday.

“Over the last year and prior to an opening decline which sharply compounded the Asian drop overnight, the shares had risen by 29% as compared to a gain of 5.1% for the wider FTSE 100 and in stark contrast to the struggles which most of its UK competitors have faced.”

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October 26, 2023

HSBC names 9 global ‘unloved stocks’ that look cheap and could be about to surge

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August 15, 2023

European stocks set to log worst year since 2018 as rate hikes, Ukraine war rattle markets

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A stock trader looks at his monitors at the stock exchange in Frankfurt, Germany.

Kai Pfaffenbach | Reuters

LONDON — European markets are on course for their worst year since 2018 as Russia’s war in Ukraine, high inflation and tightening monetary policy hammered risk assets around the world.

The pan-European Stoxx 600 index started the last trading day of 2022 down more than 12% since the turn of the year, its worst performance since a 13.24% annual decline in 2018. The European blue chip index enjoyed a bumper 2021, jumping 22.25% on the year.

Morning trade on Friday saw the U.K.’s FTSE 100 slide 0.3%, the CAC 40 down 0.6% and the German DAX lower by 0.5%. The Stoxx 600 was down 0.4%.

Economies around the world began the year still trying to emerge from the Covid-19 pandemic, with persistent lockdowns in China and other lingering supply bottlenecks forming what was now infamously mischaracterized by the U.S. Federal Reserve in 2021 as “transitory” inflationary pressure.

Russia’s unprovoked invasion of Ukraine in February, and subsequent weaponization of its food and energy exports in the face of sweeping sanctions by Western powers, sent food and energy prices skyrocketing and compounded this pressure, helping to send inflation to multi-decade highs across many major economies.

The cost-of-living crisis arising from soaring energy bills for businesses and consumers eventually began to weigh on activity, while the Fed and other major central banks were forced to tighten monetary policy with aggressive hikes to interest rates in order to rein in inflation.

However, these efforts to suppress demand weighed heavily on already faltering economies. The U.K. is projected to already be in what will be its longest recession on record, while a downturn in the euro zone is also seen as highly likely.

With the war in Ukraine showing no sign of abating and China in the process of reopening its economy as it ends three years of stringent Covid measures, investors are looking ahead with some trepidation to 2023.

“What happened this year was driven by the Fed. Quantitative tightening, higher interest rates, they were pushed by inflation, and anything that was liquidity driven sold off — if you were equities and bond investors, came into the year getting less than a percent on a ten-year treasury which makes no sense,” Patrick Armstrong, chief investment officer at Plurimi Wealth LLP, told CNBC’s “Squawk Box Europe” on Friday.

“Next year I think it’s not going to be the Fed determining the market, I think it’s going to be companies, fundamentals, companies that can grow earnings, defend their margins, probably move higher,” he said.

Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.

—CNBC’s Natasha Turak contributed to this article.

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December 30, 2022