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Stock markets lose momentum mid-week

Editor's note: Due to the public holiday on Thursday, the next issue will be published on Friday 10 May.

Investors appear to be taking a cautious approach to equity markets mid-week, after the previous days' gains were driven by interest rate expectations. The focus was on further comments from Federal Reserve members on inflation and interest rates, although the tone was more hawkish. While European equity markets were broadly positive yesterday, New York equity indices were flat and most Asian markets were lower. 

Alessandro Fezzi, LGT
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5 minutes
Stock market indices
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The majority of Asia-Pacific indices fell on Wednesday, led by Japanese equities. The Nikkei 225 fell by 1.6% and the broad Topix by around 1.2%. In contrast, Seoul's Kospi was up 0.2%, while the small-cap Kosdaq was down 0.4%. Hong Kong's Hang Seng Index pared earlier gains to fall 0.4%, while mainland China's CSI-300 Index fell 0.7%. Australia's S&P/ASX 200 remained largely unchanged.

On the New York Stock Exchange, the recent rally's momentum has faded. The Dow Jones Industrial closed at 38,884.26, virtually unchanged from the previous day's close (+0.08%). The S&P 500 closed 0.13% lower at 5187.70. The Nasdaq indices were also broadly unchanged from the previous day. Comments from Federal Reserve officials on inflation and interest rates once again took centre stage. Neel Kashkari, President of the Minneapolis Federal Reserve, warned that monetary policy could remain restrictive in the face of stubborn inflation. It is likely that the Fed will keep rates at current levels for an extended period of time. Shares in Walt Disney fell almost 10% after the release of its quarterly results. The entertainment conglomerate slipped into the red last quarter after taking a multi-billion dollar writedown. Yields in the US bond market fell to 4.45%.

On Europe's stock markets, on the other hand, the momentum of the previous days continued and the EuroStoxx 50 ended Tuesday with a daily gain of 1.2%. Financial stocks such as the Swiss UBS and the major Italian bank Unicredit, which had surprised with their business developments, were in particularly high demand. In Frankfurt, the DAX at times reached its highest level in four weeks and London's stock exchange even registered a record high. The shares of oil company BP were among those in focus. The British company reported a fall in profits of USD 2.7 billion for the first quarter due to lower oil and gas prices and a weaker fuel margin. On the other hand, BP confirmed a share buyback programme worth USD 3.5 billion. In the UK, the Bank of England's interest rate decision on Thursday will now take centre stage.

In the eurozone, retail sales rose more strongly than expected in March. Compared to the previous month, retail sales rose by 0.8% (consensus +0.7%). In February, sales had still fallen by 0.3%.

Corporate news in focus: Fresenius SE, BMW, Continental, Munich Re, Siemens Energy, Puma, Henkel, AB InBev, Alstom, Ahold Delhaize, Toyota, News Corp.

Economic data in focus: Germany industrial production, Sweden Riksbank interest rate decision, Italy retail sales. Note on Thursday (public holiday): China trade balance and Bank of England interest rate decision. 

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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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