LGT Navigator

Central banks, geopolitics in focus

This week, market participants will split their attention between monetary policy decisions from many of the world’s largest economies and the conflict in the Middle East. Asia-Pacific markets advanced on Monday as investors evaluated escalating tensions between Israel and Iran alongside key economic data from China. Oil prices climbed following Israeli strikes on Iranian oil refineries, while gold briefly reached a near two-month high before retreating to around USD 3420.

  • Date
  • Author Shane Strowmatt, LGT
  • Reading time 5 minutes

Strategist Middle East

This week, markets will focus on central bank decisions, particularly the Federal Reserve's interest rate announcement on Wednesday. The Swiss National Bank (Thursday), Bank of England (Thursday), and Norges Bank (Thursday) also hold key monetary policy meetings, while the Bank of Japan's policy decision and press conference take place on Tuesday. Inflation remains a key theme, with consumer price data from the UK (Wednesday) and Germany's producer price index (Friday) providing further insights into price pressures. Additionally, US retail sales data (Tuesday) and industrial production figures (Tuesday) will offer a snapshot of consumer activity in the world’s largest economy.

Asia-Pacific markets rise to begin week

Stocks in the Asia-Pacific region were trading higher on Monday, bucking the negative trend from Wall Street and Europe to finish last week. Japan’s Nikkei 225 was up 1.2%, while Korea’s Kospi gained 1.3%. Australia’s S&P/ASX 200 was trading marginally higher.

China’s retail sales surge in May

Solid retail sales figures could provide much support for Chinese equities, with Hong Kong’s Hang Seng Index advancing 0.2% and mainland China’s CSI 300 little changed. China’s retail sales rose 6.4% year-on-year in May, the fastest pace since December 2023, supported by government subsidies and increased consumer spending ahead of the “618” shopping event. This marked an acceleration from April’s 5.1% growth and exceeded the market’s expectations of 5%. However, industrial output slowed slightly to 5.8% growth, and fixed-asset investment expanded by 3.7% year-to-date, undershooting forecasts. Without additional stimulus, the consumption recovery could lose momentum, especially as property prices and domestic demand remain weak.

US markets decline amid Middle East tensions

US stock markets ended lower on Friday as the escalating conflict in the Middle East weighed on investor sentiment. The Dow Jones Industrial Average dropped 1.8% to 42,197.79 points, while the S&P 500 and Nasdaq 100 fell 1.1% and 1.3%, respectively. Rising oil prices and a shift towards safe-haven assets like gold and government bonds reflected heightened geopolitical uncertainty. Energy stocks gained on surging oil prices.

US consumer sentiment rebounds

Consumer sentiment in the US rose by 15.9% month-on-month in June, reaching 60.5, marking the first improvement in six months. However, the index remains 11.3% below its level from June 2024 and nearly 20% below December 2024, when sentiment peaked post-election. The rise was broad-based, with all five components increasing, driven by easing concerns over tariffs and policy volatility. Year-ahead inflation expectations dropped sharply to 5.1% from 6.6% in May, while long-term expectations edged down to 4.1%, reflecting tempered fears of tariff-induced inflation.

German inflation stabilises

Germany's inflation rate remained steady at 2.1% in May 2025, unchanged from April, as falling energy prices offset rising costs in food and services, according to Destatis on Friday. Energy prices dropped 4.6% year-on-year, led by declines in motor fuel and heating oil, while food prices rose 2.8%, with significant increases for fruit and dairy. Core inflation, excluding food and energy, stood at 2.8%, reflecting persistent price pressures in services, which saw a 3.4% annual increase driven by transport and healthcare costs. Month-on-month, consumer prices edged up by 0.1%. European stock markets ended the week in negative territory. The Euro Stoxx 50 slipped 1.3%, while Germany’s DAX lost 1.1% and France’s CAC 40 declined 1%. The Swiss Market Index (SMI) underperformed, falling 1.4%.

Corporate and economic calendar

Corporate news in focus: There is no major corporate news scheduled today.

Economic data in focus: Swiss producer and import prices (08:30), Swiss SECO economic forecasts (09:00), Italian Consumer Price Index (10:00), Empire State Manufacturing Index (14:30).

LGT helps you make informed investment decisions

Global economic and market trends at a glance

You can also follow us on Facebook or LinkedIn – or visit Insights and discover interesting background articles. If you have questions, a consultant from the bank will be happy to help you.

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