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US economic data weighs on equity markets

Weaker retail sales data and stronger producer prices in the US dampened the market sentiment at the end of the week. The slightly stronger inflationary pressures are likely to reinforce the Federal Reserve's (Fed) cautious stance on interest rate cuts. The Federal Reserve will announce its monetary policy decision as early as next week. Given the latest data on inflation and the labour market, the Fed is likely to continue to be patient.

Alessandro Fezzi, LGT
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5 minutes
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The latest data on producer prices confirmed the environment of potentially stronger inflationary pressures in the United States. On an annualised basis, producer prices rose by 1.6% in February, well above analysts' consensus of 1.1%. On a month-on-month basis, producer prices rose 0.6%, twice as much as expected. Even on a core basis, i.e. excluding often volatile energy and food prices, producer price inflation was stronger than expected at 2% for the year as a whole. Furthermore, although US retail sales rose 0.6% month-on-month in February, this was less than the 0.8% average forecast by economists. Moreover, the 1.1% decline in January was larger than initially thought.

Weighed down by the latest economic data, the Dow Jones Industrial closed at 38,905.66 points in New York on Thursday, down just under 0.4% for the day. The S&P 500 closed 0.3% lower at 5,150.48 and the Nasdaq indices were also down 0.3%. Processor maker Nvidia continued to consolidate after its record run, losing 3.2% yesterday. The focus is now on Nvidia's AI conference on Monday. Electric car maker Tesla lost 4.1%, falling to its lowest level since May.

The US dollar benefited from stronger-than-expected US producer prices, pushing the euro below the 1.09 level. In the bond market, the benchmark ten-year US Treasury yield rose further to just under 4.3%.

In Asia, most stock indices ended the week lower. In Hong Kong, the Hang Seng Index lost 1.8%, weighed down by consumer discretionary and technology stocks. In mainland China, the CSI 300 fell 0.1%. Meanwhile, China's central bank left its one-year interest rate on the medium-term lending facility unchanged at 2.5%. In Tokyo, the Nikkei 225 was down almost 0.3%, while the broader Topix bucked the general sell-off to close 0.3% higher. Ahead of the Bank of Japan's next interest rate decision next week, the focus in Japan will be on the spring wage negotiations. In Seoul, the Kospi lost 1.5% and the small cap Kosdaq lost 0.8%. In Australia, the S&P/ASX 200 also fell just under 0.6% to close at its lowest level in around two weeks.

European Central Bank (ECB) chief economist Philip Lane stressed in an interview that patience will be needed before the central bank's first rate cut. The ECB needs to take its time to find the right moment to cut rates. In his view, the evidence is mounting that the disinflation process in the eurozone has continued. In June, the central bank should have a clearer picture of the inflation trend. ECB President Christine Lagarde had already hinted at a first rate cut in June at last week's rate decision. The main focus will be on wage negotiations, which will have a decisive impact on inflation.

Focus on corporate news: There is no major corporate news due today.

Economic Data in Focus: France consumer prices, Italy consumer prices, Italy trade balance, Italy retail sales, Bundesbank President Nagel speaks, US import prices, New York Empire State industrial indicator and Michigan consumer confidence. 


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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Lten steht Ihnen ein Berater der Bank gerne zur Verfügung.

Herausgeber: LGT Bank (Schweiz) AG, Glärnischstrasse 36, CH-8027 Zürich
Redaktion: Alessandro Fezzi
Quelle: LGT Bank (Schweiz) AG

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