The outlook for a continued restrictive stance by central banks is currently increasing interest rate concerns on capital markets again. This was triggered by the latest economic data from the US, which pointed to a more resilient than expected economic development and continued inflationary pressure. The start of the week is likely to be rather quiet due to the holiday-related absence of US markets. From an economic monitoring perspective, the focus in the next few days will be on the latest results of the regular purchasing managers' surveys on Tuesday as well as the Ifo business survey on Wednesday and the minutes of the Federal Reserve's latest interest rate decision.
On the New York Stock Exchange, investor sentiment remained battered and characterised by caution on Friday ahead of the extended weekend. The dominant theme remains latent interest rate concerns, which weigh especially on the technology sector. On the Nasdaq, the indices fell by around 0.7% on Friday, posting a moderate gain of 0.4% for the week. The Dow Jones Industrial closed 0.39% higher at 33,826.69 on Friday, losing 0.1% over the past week. The S&P 500 exited trading before the weekend at 4,079.09 points, down 0.28% for the day. At the same time, the yield on ten-year US government bonds climbed to its highest level since November, then fell back slightly to 3.82%.
The economic outlook in the US has clouded over at the beginning of the year. This is indicated by the monthly leading indicator compiled by the US market research institute Conference Board. The indicator fell by 0.3% compared to the previous month and thus registered the tenth decline in a row. The composite index is made up of ten different indicators and is intended to provide an indication of the likely course of the US economy over the next six months.
In Asia, stock markets were mostly up at the start of the week. China's central bank left its key interest rates for one- and five-year loans unchanged, which was largely in line with expectations. In Shanghai and Shenzhen, the indices rose by 1.8%. In Hong Kong, the Hang Seng Index started the week up 1%, with the Hang Seng Tech Index gaining around 1.7%. In Tokyo, however, the Nikkei 225 was virtually unchanged from Friday's close.
The price of a troy ounce of gold reached its lowest level in seven weeks or since the beginning of the year. Among other things, this was due to concerns about the Fed's continuing restrictive monetary policy and the resulting rise in interest rates in the US. The latest economic data from the US had recently increased interest rate concerns again.
The geopolitical tensions against the background of the “balloon affair” between the US and China could not be defused for the time being. US President Joe Biden had offered direct talks with China's leader Xi Jinping after the shooting down of a suspected Chinese spy balloon over the USA led to tensions. However, Beijing initially reacted dismissively, stressing that the balloon's intrusion into US airspace was an unexpected and unintended event. On the sidelines of the Munich Security Conference, the highest-ranking representative of the Chinese Foreign Ministry present, Wang Yi, also offered no apology during his meeting with US Secretary of State Antony Blinken.
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Editor: Alessandro Fezzi,
Source: LGT Bank (Switzerland) Ltd.