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Rising inflation fears unsettle markets

The European Central Bank lifted its deposit rate on Thursday as the Iran war’s energy shock threatened to keep euro-area inflation above target for longer, while European equities closed lower. US shares also declined on Thursday, led by technology stocks, and Asian markets were trading sharply lower on Friday as elevated oil prices and higher Treasury yields weighed on risk appetite. Investors will focus on US inflation data on Friday after producer-price growth accelerated in August, before the Federal Reserve’s (Fed) policy decision next week.

  • Data
  • Autore Shane Strowmatt, Senior Investment Writer
  • Tempo di lettura 5 minuto

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The European Central Bank raised its deposit rate by 25 basis points to 2.5% on Thursday, following a June increase and a pause in July, as the Iran war-driven energy shock has renewed inflationary pressure. The ECB forecasts inflation of 3% this year, 2.5% next year and 2.1% in 2028, remaining above its 2% objective for an extended period. President Christine Lagarde said the euro-area economy remained resilient, supported by a robust labour market and recovering services activity, although higher energy prices could have broader effects on prices and wages. On Friday, the euro was trading slightly lower versus the US dollar than before the ECB decision a day earlier, while the Euro Stoxx 50 fell 0.7%, Germany’s DAX lost 0.8%, France’s CAC 40 declined 0.5% and the Swiss Market Index slipped 0.5% on Thursday.

Asian stocks fall as oil jumps

Asian equities fell sharply on Friday as Brent crude oil futures traded near USD 106.95 per barrel and higher US Treasury yields heightened concerns that inflation will lead the Fed to raise interest rates next week. The ten-year US Treasury yield stood at just below 5%. Korea’s KOSPI dropped 2.1%, Japan’s Nikkei 225 lost 2.2%, while semiconductor shares including SK Hynix, Samsung Electronics and Taiwan Semiconductor Manufacturing also retreated. Hong Kong’s Hang Seng Index fell 0.7%, mainland China’s CSI 300 declined 1.3% and Australia’s S&P/ASX 200 lost 1%.

US stocks fall on rate fears

US equity markets extended their weekly decline on Thursday as the Middle East conflict fuelled concerns that inflation could prompt further Fed rate increases. The Nasdaq-100 fell 1.1% to 29,103.51 points, while the S&P 500 lost 0.6% to 7591.70 and the Dow Jones Industrial Average declined 0.6% to 52,064.10. Technology shares came under broad pressure after Chinese firm DeepSeek unveiled a new artificial intelligence (AI) model, although Apple gained 3.6% following favourable assessments of its foldable iPhone.

US producer price inflation accelerates

US producer prices increased 0.4% in August from July, accelerating from a revised 0.1% rise in the previous month and matching market expectations, data released on Wednesday showed. Annual wholesale inflation climbed to 5.4% from 4.8% in July, while core producer prices, excluding food and energy, rose 0.2% month-on-month and 4.6% year-on-year. The figures precede Friday’s consumer price report.

German inflation rises on fuel prices

German consumer price inflation accelerated to 2.9% year-on-year in August from 2.8% in July and 2.3% in June, Destatis confirmed on Thursday. Energy prices rose 10.5% from a year earlier, led by a 27.7% jump in motor fuel costs as the war in Iran continued to affect crude oil markets. Core inflation, which excludes food and energy, stood at 2.4%, while food prices rose just 0.1% and service inflation eased slightly to 2.8%.

Corporate and economic calendar

Corporate news in focus: There is no major corporate news scheduled today.

Economic data in focus: UK gross domestic product (08:00), UK manufacturing production (08:00), UK trade balance (08:00), SECO Swiss consumer sentiment (09:00), Italian unemployment rate (10:00), Swiss National Bank Chairman Martin Schlegel speaks (11:15), Bank of Russia interest rate decision (12:30), US Consumer Price Index (14:30), University of Michigan Consumer Sentiment Index (16:00).

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Editor: Alessandro Fezzi
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