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Stock markets wait for monetary policy signals

Investors remained cautious ahead of this afternoon's inflation data from the US and Wednesday's eagerly awaited interest rate decision by the US Federal Reserve. The monetary policy decisions of the ECB, Bank of England, Swiss National Bank and Norway's central bank are also due later in the week. The capital markets are hoping for clues as to when the major central banks might start to cut interest rates next year, given the easing of inflationary pressure. 

Alessandro Fezzi, LGT
Temps de lecture
5 minutes
Investor in light and shade
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The positive mood on the New York Stock Exchange remained intact at the start of the week and the majority of stock markets in Asia also rose. In the run-up to the interest rate decision in the US, the Dow Jones Industrial rose by 0.43% to 36,404.93 points, reaching a new high since the beginning of last year. The S&P 500 gained 0.39% and closed at 4,622.44 points. On the Nasdaq, the indices rose by 0.85%. On the bond market, the yield on ten-year US government bonds fell to 4.20%.

The financial markets are eagerly awaiting the US Federal Reserve's (Fed) last monetary policy decision of the year. The consensus is that interest rates will remain on hold and speculation regarding an imminent cut in key interest rates has been dampened for the time being by the latest labor market report. The US inflation data expected today is an important signpost. The rate of consumer price inflation was still 3.2% in October and is now forecast at 3.1% for November.

Among the individual stocks, Oracle reported lower than expected sales growth. At USD 12.9 billion, the US software giant generated 5% more revenue in the second quarter than in the same quarter of the previous year, but less than the consensus forecast of USD 13.1 billion. The pace of growth in the cloud business slowed for the second time in a row. As a result, the share price fell by more than 8% in after-hours trading.

In Asia, shares in Hong Kong led the gains on the Asia-Pacific markets on Tuesday. The Hang Seng Index recovered from its low for the year and rose by 1.2%, while the CSI 300 Index fell slightly. The South Korean Kospi climbed by 0.4%. In Tokyo, the Nikkei 225 closed slightly higher by 0.15% after the index had gained 1.6% in the previous session. However, the broader Topix lost 0.2%. In Australia, the S&P/ASX 200 rose 0.5% to its highest level since September 15.

According to the global "Risk Appetite Index" of the US financial services provider State Street, the risk appetite of institutional investors increased in November. The barometer comprises a value of minus 1 to plus 1. In the current reporting period, the index, which is made up of 22 factors, climbed from minus 0.55 points in October to zero points. According to State Street, fewer funds flowed into safe sectors in November and demand for the US dollar also declined.

Corporate news in focus: Hannover Re Investor Day.

Economic data in focus: Germany wholesale prices November (08:00), UK unemployment figures November (08:00), Germany ZEW economic expectations December (11:00), USA consumer prices and real incomes 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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