European and Asian Stocks inch higher in holiday lull

European and Asian share prices inched higher on Tuesday as trading in some of the world’s major financial markets resumed after a Christmas break, with oil and the dollar also rising marginally. Concerns about Italian banks, Chinese growth and U.S. President-elect Donald Trump’s protectionist bent look set to keep investors on edge into the start of 2017.

But expectations the new administration will splash out on a fiscal boost for the U.S. economy also has markets expecting inflation and more growth overall that should benefit companies globally. Data on Tuesday showed Chinese industry racked up its strongest profit growth in three months in November, suggesting the world’s second-largest economy was improving. In Japan, however, core consumer prices fell in annual terms for the ninth month as household spending slumped.

“Markets have calmed down a lot since the U.S. election and the decisions by the ECB and Fed (earlier in December),” said Daniel Lenz, a bond market strategist with DZ Bank in Frankfurt. “There is a feeling that some of the expectations after the Trump election may have been exaggerated and now it is a question of waiting to see what the U.S. government will look like when it finally takes shape.”

Germany’s DAX .GDAXI and France’s CAC 40 .FCHI both gained around 0.1 percent while Spain’s IBEX .IBEX dipped by a similar amount. British markets were closed for a holiday, along with those in Australia, New Zealand and Hong Kong. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was marginally higher while Japan’s Nikkei .N225 closed little changed.

“It is the time of the year when markets trade with hushed tones,” Jingyi Pan, market strategist at IG, wrote in a note. “The magnitude of moves could remain capped with thin market trades expected to remain the case.”

China’s CSI 300 index .CSI300 was down 0.1 percent and the Shanghai Composite .SSEC slipped almost 0.2 percent, despite the upbeat industrial data. The yen fell following the inflation numbers but was still around 1 yen stronger than lows hit after the U.S. Federal Reserve raised dollar interest rates two weeks ago.

In a currency market expected to trade conservatively into the end of the year, strategists say they will be watching chiefly for any sign of a squeeze in the cost for banks of borrowing dollars relative to other currencies. Such costs – called the cross currency basis – have been rising and could support the dollar over the next few days.

“The rise in the euro dollar basis is an argument for dollar strength. Plus you have the fundamental factors going into the beginning of next year that point (that way),” said Lutz Karpowitz, a strategist with Commerzbank in London. “But so far it really has been quiet.”