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Interest rate worries have stock markets firmly in their grip

The possibility of further hikes in key interest rates in the US is keeping stock markets in check. Recent US economic data fuelled speculation that the Fed could tighten the interest rate screw again to fight inflation. Previously, the minutes of the latest meeting of the Federal Reserve had made it clear that the door remains open for further rate hikes in the fight against high inflation. Even solid quarterly figures from Cisco could not keep the indices in New York afloat on Thursday. On Asia's markets, indices joined Wall Street's negative lead, while the ten-year US Treasury yield is nearing its highest level since 2007. 

Alessandro Fezzi, LGT
Tempo di lettura
5 minuto
© Shutterstock

The Dow Jones Industrial closed yesterday at 34'474.83 points, down 0.84% from the previous day and trading at about the lowest level since mid-July. The broad S&P 500 also continued the recent downward trend, falling 0.77% to 4'370.36 points. The Nasdaq also headed south with daily losses of around 1.1%. Meanwhile, a decline in initial jobless claims had pointed to a further robust labour market and the Philly Fed industrial indicator signalled a surprising brightening of the business climate in the Philadelphia economic region. Looking at individual stocks, Cisco managed to impress with a share price increase of around 4% thanks to a strong quarterly result. In the bond market, US government bond prices remained under pressure on Thursday and the yield on ten-year Treasuries rose to 4.30%, close to the highest level since 2007.

Equity markets in the Asia-Pacific region could not escape the negative trend before the weekend. In Tokyo, the Nikkei 225 traded around 0.4% lower after inflation data was released. Japan's core inflation rate fell to 3.1% in July from 3.3% a month earlier. Headline inflation was unchanged at 3.3%. The fragile situation in the Chinese real estate market continues to cause uncertainty. The ailing Chinese real estate giant Evergrande has filed for bankruptcy protection in the US. Hong Kong's Hang Seng index slipped 0.35% today, while the mainland's CSI 300 index traded near zero. South Korea's Kospi also traded lower by nearly 0.5%, with the Kosdaq posting a one-day loss of 1.28%.

Corporate news in focus: Estee Lauder Q4 figures and Deere & Co Q3 figures.

Economic data in focus: UK retail sales July (08:00 CET), Switzerland industrial production Q2 (08:3 0), Eurozone consumer prices July (11:00).


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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.