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Equity markets await fresh impetus

After a positive start to the week on Wall Street, investors are now awaiting US inflation data due on Thursday, which will have a significant impact on the Federal Reserve's monetary policy. At the end of the week, the start of the corporate reporting season is eagerly awaited. 

Alessandro Fezzi, LGT
Reading time
5 minutes
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After a weak start to the year, the Dow Jones Industrial rose 0.58% on Monday to close at 37,683.01. The S&P 500 gained 1.41% to close at 4,763.54. On the Nasdaq, stocks rebounded from recent losses to gain around 2.1%, led by a rally in chip stocks. In particular, Nvidia shares rose 6.4% to a record high. Investors are now awaiting US inflation data due on Thursday, which is also crucial for US monetary policy. Meanwhile, the benchmark 10-year US Treasury yield remained just above 4%.

Asia-Pacific markets were broadly higher on Tuesday, recovering from the previous session's sell-off. Tokyo's Nikkei 225 rose 1.1% to its highest level since March 1990, while the latest data showed that inflation in Tokyo fell to 2.4% in December from 2.6% the previous month. Hong Kong's Hang Seng Index was up 0.35%, while the mainland Chinese CSI 300 was up 0.3%. South Korea's Kospi was also up 0.3% despite heavyweight Samsung Electronics cutting its earnings forecast for the fourth quarter of 2023. In Australia, the S&P/ASX 200 was up just under 1%.

Oil prices came under heavy pressure at the start of the week despite ongoing tensions in the Red Sea. According to analysts, Saudi Arabia's price cuts were the main culprit. The price of a barrel of West Texas Intermediate (WTI) for February delivery fell by around USD 2 to USD 71.70 and a barrel of North Sea Brent crude for March delivery stood at around USD 76.65 on Monday, also around USD 2 lower than at the end of last week.

In Switzerland, inflation rose sharply again at the end of last year. Over the year as a whole, consumer prices rose by 1.7%. In November the inflation rate was 1.4%. Since the summer, inflation had also tended to slow down in Switzerland. The current rise in consumer prices is mainly due to the so-called base effect of energy prices. After a very sharp fall in the same month last year, energy prices have once again made a larger contribution to inflation. Price increases for public transport have also had an impact. However, in view of the increased economic risks, particularly with regard to the global economy, the SNB may well be given more room for manoeuvre to ease monetary policy again.

The outlook for the German economy remains bleak. Although exporters were able to increase their exports by 3.7% month-on-month in November last year, exports were down 5% year-on-year due to the weakening global economy. In the first eleven months, German exports fell by 1.1% compared with the same period last year. Imports fell by 12.2% over the year as a whole. The attacks on merchant ships in the Red Sea are another source of uncertainty. According to the Munich-based economic research institute Ifo, the economic outlook in Germany remains "rather modest" for this year.

Corporate news in focus: SNB preliminary annual figures 2023, Munich Re report on natural catastrophes 2023.

Economic data in focus: Switzerland labour market data December/year to 2023, Germany industrial production August (08:00), France trade balance November (08:45), SNB foreign reserves December (09:00), Eurozone unemployment rate November (11:00), US trade balance November (14:30).


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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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