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Markets bounce back from US inflation surprise

Equity markets rebounded midweek after surprisingly sticky US inflation pressured stocks a day earlier. Stock markets were up in the US and Europe, as well as Asia, despite a gross domestic product (GDP) miss in Japan.

Shane Strowmatt, LGT
Tempo di lettura
5 minuto
Market numbers
© Shutterstock

In New York, stock indices recovered from losses a day earlier. The Dow Jones Industrial gained 0.4% and the S&P 500 climbed nearly 1% to finish Wednesday’s session above the 5000 mark again. The Nasdaq-100 jumped 1.2%. Crypto-related stocks were driving gains as the price of bitcoin shot up again on Wednesday. Shares of Coinbase, Marathon Digital and Riot Platforms each gained around 14% on Wednesday. Bitcoin was trading near USD 52,000 having started the year around USD 42,000.

In the Asia-Pacific region, stock markets were mostly trading in positive territory, despite GDP coming in lower than expected in Japan. The Japanese economy shrank by 0.1% in the fourth quarter, when compared to the previous quarter. The contraction to finish the year means that Germany overtook Japan as the third-largest economy in 2023. In Tokyo, the Nikkei 225 nevertheless closed 1.2% higher on Thursday. In South Korea, the Kospi fell about 0.3%. In Australia, employment rose by just 500 jobs in January, well below market expectations. The stock market there also ignored the macroeconomic data and climbed 0.8% on Thursday. Hong Kong’s Hang Seng Index was up 0.4%. Markets in mainland China are closed for the Lunar New Year festival all week.

The euro area economy just managed to avoid recession at the end of 2023, according to data released Wednesday. GDP in the euro area remained flat in the fourth quarter of last year, when compared with the previous quarter. That follows a 0.1% contraction in the third quarter. When compared to the same period of the previous year, the euro area economy grew by just 0.1% in the fourth quarter. Growth was dragged down by the bloc’s biggest economy, Germany, which contracted by 0.3% in the fourth quarter. Despite the fragile state of the economy, employment in the 20-nation group increased by 0.3% in the fourth quarter. Markets expect the European Central Bank to begin cutting interest rates either at its April or June meeting in an effort to support the economy. The Euro Stoxx 50 gained 0.4% on Wednesday.

Inflation in the UK came in lower than forecast in January at 4% when compared to the same month a year earlier. The price of food and household goods pushed the Consumer Price Index (CPI) down during the month. While falling inflation bolsters hopes that the Bank of England will soon begin lowering interest rates, Tuesday’s labour market data - which showed falling unemployment and strong wage increases - suggests the economy can still withstand higher interest rates. Markets are anticipating three rate cuts from the Bank of England this year, starting in August.

Corporate news in focus: Quarterly figures from Airbus, Commerzbank, Deere & Co., Renault, Schneider Electric, Stellantis.

Economic data in focus: UK gross domestic product, European Central Bank President Christine Lagarde speaks, US weekly initial jobless claims, US retail sales.


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