European markets cautious as investors weigh economic outlook

European markets started the new trading week on an uncertain note Monday with investors reassessing the economic outlook.

The pan-European Stoxx 600 was up 0.2% by early afternoon, with tech stocks adding 1.5% while chemicals slid 0.5%.

Global markets have been weighing the possibility that the Federal Reserve is getting ready to slow the pace of its inflation-fighting rate hikes after economic data last week showed a decline in wholesale prices and retail sales.

On Friday, Fed Gov. Christopher Waller said he favors just a quarter-point hike on Feb. 1, when the central bank gives its next interest rate policy update. Waller also said that rates are already high enough to be slowing down the economy.

Kristalina Georgieva, managing director of the IMF, said Friday at the World Economic Forum that the global economic outlook is not as bad as feared a couple of months ago — “but less bad doesn’t quite yet mean good.”

“We have to be cautious,” she told a closing panel at the World Economic Forum in Davos moderated by CNBC.

US stock futures were little changed Monday morning while shares were higher in Asia overnight, but most markets in the region are closed for the Lunar New Year holiday, with markets in Shanghai shut for the whole week.

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