In the run-up to the interest rate decision of the Federal Reserve (Fed) in midweek, stock market investors were cautious at the beginning of the week. In addition, rising oil prices heightened inflation concerns. On the US stock exchanges, indices remained virtually unchanged at the start of the week, while on the markets in the Asia-Pacific region share prices were under slight pressure today. In addition to the Fed's monetary policy decision, the interest rate decisions of the Swiss National Bank (SNB), the Bank of England (BoE) as well as the Bank of Japan (BoJ) and the People's Bank of China (PBoC) are also due this week.
On Wall Street, the upcoming interest rate decision by the Fed is causing a lower risk appetite. The Dow Jones Industrial closed at the start of the week at 34,624.30 points (+0.02%) and the market-wide S&P 500 went out at 4,453.53 points (+0.07%). On the Nasdaq technology exchange, indices also hardly moved. Latest economic data from the US brought no new impetus. It is eagerly awaited whether the US central bank will once again tighten interest rates or take another pause. The decisive factor will be the balance between inflation and economic development.
In the meantime, oil prices are rising, adding to inflation concerns. The price of West Texas Intermediate (WTI) crude rose on Monday to its highest level in almost a year. US government bonds reversed their initial moderate losses, with the yield on ten-year Treasuries trading at 4.31%. Latest data had shown earlier that the mood in the US housing market has clouded for the second time in a row. The home market index of the National Association of Home Builders (NAHB) fell more than expected from 50.0 to 45.0 points. Analysts had expected an average of 49.0 points. The main reason for this was the rise in mortgage rates. The euro continued to stabilize after the lowest levels since March on Monday and is currently trading at 1.0675.
On Asia's stock exchanges, the indices declined on Tuesday. Japan's Nikkei 225 fell by almost 1% after the holiday-related suspension. South Korea's Kospi and Kosdaq fell 0.2% and 0.5%, respectively. In Hong Kong, the Hang Seng index was slightly lower than the previous day. In Shanghai and Shenzhen, stock indices also traded in negative territory. In Australia, the S&P/ASX 200 fell by 0.25%.
The German Bundesbank expects economic output to decline in the third quarter of this year due to weak consumption and exports and stubbornly high inflation. Thanks to good earnings and financing ratios and temporary government aid, the industrial sector, overall, cushioned the shock of extremely high energy prices quite well. One problem, however, is the dependence on China. Almost half of the industrial companies in Germany are dependent on critical upstream products from China, and 80% of them consider substitutes from other countries to be difficult.
Corporate news in focus: Anheuser-Busch InBev capital market day and from the UK Kingfisher with half-year figures.
Economic data in focus: Eurozone current account July (10:00 a.m.) and consumer prices August (11:00 a.m.), from the US housing starts and building permits August (02:30 p.m.).
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.