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US consumer confidence falls to four-month low

Consumer confidence in the US dropped to a four-month low in September while another indicator of economic expectations released Tuesday signalled the US economy is likely to fall into recession. Market sentiment continued to sour mid-week, pressured by the looming US government shutdown. If lawmakers do not agree on spending by the end of the week, it could cause the US government to shut down some functions as early as Sunday.

Shane Strowmatt, LGT
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The Conference Board Consumer Confidence Index fell to 103 points in September from 108.7 points in August. The Expectations Index – which looks at consumers’ short-term outlook for the economy – fell to 73.7 from 83.3 in August. Historically, an Expectations Index value 80 points signals that a recession is likely within the next year. The survey results of the Conference Board’s Consumer Confidence Survey suggested consumers are struggling to pay for groceries and petrol in particular. Political issues and higher interest rates are also among consumers’ main concerns.

In New York, stock indices tumbled on Tuesday not only due to the imminent government shutdown and weak consumer confidence, but also due to concerns that interest rates could remain higher for longer than previously expected. The Dow Jones Industrial dropped 1.1%. The S&P 500 hit a three-month low, during Tuesday’s session, closing down 1.5%. The Nasdaq-100 also lost a bit more than 1.5%.

Asia-Pacific stock markets were trading mixed on Wednesday, with most indices down and Chinese equities bucking the trend. Profits at China’s industrial companies dropped 11.7% year-on-year during the first 8 months of 2023, data released Wednesday showed. That is less than the 15.5% drop in the first 7 months of the year, which suggests recent government measures to support the economy may be beginning to bear fruit. Hong Kong's Hang Seng Index was trading up 0.5%, while the Shanghai Composite rose 0.2%. Shares of China Evergrande were trading up 1.3% on Wednesday after losing more than one fourth of their value in the two prior trading sessions. A unit of the property developer, which has been at the centre of concerns surrounding the Chinese real estate sector, missed a bond payment at the start of the week.

Elsewhere in Asia, Tokyo’s Nikkei 225 lost 0.2% and in South Korea, the Kospi was likewise down 0.2%. In Australia, the S&P/ASX 200 was trading 0.3% lower.

Corporate news in focus: Hornbach Q2 figures, TotalEnergies Investor Day.

Economic data in focus: Germany’s GfK Consumer Climate (08:00 CET), US durable goods orders (14:30), Swiss National Bank Chairman Thomas Jordan speaks (18:45).


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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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