Last week was all about colours. It started with the so-called Blue Monday, the third Monday of January which is supposed to be the most depressing day of the year. And this year it has fully deserved its reputation as a string of weak economic data and gloomy predictions was released throughout the day. China set the tone by reporting a 6.6% growth rate for 2018, the lowest annual pace in 28 years and, later in the day, the IMF added to the market somber mood by revising downwards its growth forecasts for 2019. Global growth is now expected to slow from 3.7% in 2018 to 3.5% in 2019 (a 0.2% downgrade compared to the IMF previous forecast) and the outlook is even more pessimistic for advanced economies where a drop from 2.3% in 2018 to 2.0% in 2019 and 1.7% in 2020 is forecasted.
So, no wonder the markets opened the week feeling blue. And Blue turned into Red, not because of the lunar eclipse, the so-called Super Blood Wolf Moon, which coloured the sky with a spectacular shade of red, but due to the market reaction to this news flow fueled with pessimism. In the US, where stock markets were closed on Monday in observance of Martin Luther King Jr day, the S&P 500 started the week with a 1.4% decline on Tuesday. In Europe the decrease was more modest, but the trend was similar.
But, on Thursday Mario Draghi’s downbeat comments as he acknowledged the deterioration of the outlook for the Eurozone, were paradoxically well received by investors who interpreted it as a signal that the central bank may delay interest rate hikes. Therefore, the markets switched to green with major indices rebounding.
Over the week, the Eurostoxx 50 gained 0.9% while Ageas’ share increased by 0.7%, outperforming the Stoxx 600 Insurance (+0.5%).