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Caution ahead of key inflation reports

Capital markets are eagerly awaiting this week's inflation data from the US and the eurozone. Today sees the release of producer prices in the US and tomorrow, Wednesday, consumer prices will take centre stage. These could be crucial for the Federal Reserve's next moves. As a result, stock market investors were largely cautious at the start of the week.

Alessandro Fezzi, LGT
Reading time
5 minutes
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On Wall Street, trading was quiet at the start of the week. The Dow Jones Industrial ended the day down 0.2% to close at 39,431.51 points on Monday. The S&P 500 was virtually unchanged at 5221.42 points (-0.02%), while the Nasdaq technology index was up by around 0.2%. Electric car manufacturers such as Tesla (+2%), Rivian (+9%) and Lucid (+6%) had a positive impact. This was due to speculation that the US government may raise import tariffs on Chinese EVs to 100% from the current 25%. Apple shares were also in demand. Bloomberg reported that Apple (+2%) was close to a deal to use OpenAI technology on the iPhone. Intel shares were also up more than 2% after the Wall Street Journal reported that the semiconductor company could receive an investment of around USD 11 billion from financial investor Apollo Global Management to help Intel build a factory in Ireland. A surge in Gamestop shares caused even more excitement. They rose by almost 120% at one point and closed more than 70% higher. This was due to speculation about the return of financial analyst Keith Gill, who was partly responsible for the massive share price gains in 2021.

Meanwhile, in the bond market, the yield on ten-year US Treasuries was unchanged at just under 4.5%. The focus now shifts to new evidence of inflationary trends in the US. Producer price data is due this afternoon, followed by consumer price data on Wednesday. After being more persistent than expected in the first three months of this year, US inflation is likely to have been at least somewhat more moderate in April.

Asia-Pacific markets pared early gains on Tuesday after the Dow Jones Industrial Average in New York snapped its eight-day winning streak. In Tokyo, the Nikkei 225 index was virtually unchanged from the previous day's close. Latest data from the Bank of Japan showed that inflation remained stable year-on-year in April, but import prices rose 6.4% year-on-year last month, likely due to the sharp fall in the yen. South Korea's Kospi fell by 0.1%, while the Kosdaq index rose by 0.9%. In Australia, the S&P/ASX 200 fell 0.4% and in Hong Kong the Hang Seng Index was flat after rising 0.6% in early trading. In mainland China, the CSI 300 index also gave up early gains to end the day around 0.1% lower.  

Corporate news in focus: Sony, Tencent, Alcon, Bayer, Porsche Holding, Fraport, Hannover Re, Veolia Environnement, Vodafone, Home Depot.

Economic data in focus: Germany Consumer Prices and Retail Sales, UK Unemployment Claims, Switzerland Producer and Import Prices, Spain Consumer Prices, Germany ZEW Economic Sentiment, US Producer Prices.

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

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