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Stocks stutter, oil drops, dollar strengthens as peak rate hopes fade

Stocks struggled to find a clear direction midweek as the optimistic outlook about peak rates faded away. Investors are awaiting comments from Federal Reserve (Fed) Chair Jerome Powell at an event in Washington later in the day for any signs about whether the Fed’s hiking cycle is really over. The dollar strengthened while oil prices fell to multi-month lows.

Shane Strowmatt, LGT
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5 minutes
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Oil prices remained weak on Wednesday after dropping to three-month lows on Monday. West Text Intermediate crude was trading around USD 77 per barrel and brent cost just under USD 82 per barrel. The US Energy Information Administration said on Tuesday it expects demand for crude by the world’s largest economy oil to fall. Also, shrinking export data out of China raised concerns that global demand may be lower than previously expected.

In the Asia-Pacific region, stock markets were mostly trading in the red on Wednesday. In Tokyo, the Nikkei 225 finished the day down 0.3% despite improving business confidence among manufacturers for the first time since August. In South Korea, the Kospi was 0.9% lower. In Australia, the S&P/ASX 200 gained 0.3%. Hong Kong's Hang Seng Index was down 0.4%, while the Shanghai Composite fell 0.3%.

In New York, Wall Street’s large indices finished Tuesday’s session with moderate gains. The Dow Jones Industrial gained 0.2% and the S&P 500 was up 0.3%. The Nasdaq-100 jumped 0.9%. The gains were mild compared with last week, but the major indices on Wall Street were making their longest winning streaks in years. The S&P 500 was up for a seventh day in a row, it’s longest winning streak in roughly 2 years.

Europe’s earnings seasons continued this week with UBS shares ending Tuesday’s session up 1.8% even after the Swiss bank presented its first quarterly loss in multiple years due to the integration of its formal rival, Credit Suisse. Investors were optimistic about the bank’s ability to attract money at its wealth-management business, which booked USD 22 billion of net new money in the quarter. Credit Suisse’s wealth management unit also managed to book positive inflows for the first time in a year and a half.

Daimler truck also reported third-quarter results with sales growing around 3%, somewhat below market expectations. The firm’s stock dropped 4.6% Tuesday.

In Switzerland, the unemployment rate stayed at a low 2.1%, data released Monday showed. While the labour market was still quite strong, concerns were mounting that the housing market in the country is overheated. Housing prices in Switzerland reached a multi-year high with prices increasing by 1.3% in the third quarter when compared to the same period a year earlier.

Elsewhere in Europe, euro area producer prices were on the rise again, with prices for industrial manufacturers increasing 0.5% in September. When compared to September 2022, prices have come down by 12.4%.

Corporate news in focus: Earnings figures from Airbus, Swiss Life, Munich Re, Bayer, Adidas, Ahold Delhaize, DHL Group, Continental.

Economic data in focus: German Consumer Price Index (08:00 Uhr), French trade balance (08:45), Switzerland’s KOF Business Tendency Surveys (09:00), euro area retail sales (11:00), Federal Reserve Chair Jerome Powell speaks at a conference in Washington (15:15), weekly US EIA Petroleum Status Report (16:30).


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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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