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Hormuz tensions, ECB decision and US inflation in focus

This week, market participants will continue to monitor the situation in the Strait of Hormuz, after hostilities between the US and Iran intensified last week and commercial shipping through the key oil-export route remained subdued. Monetary policy will also take centre stage as the European Central Bank announces its interest-rate decision on Thursday. In the US, producer-price data on Thursday and Consumer Price Index data on Friday will provide an important update on inflation following the stronger-than-expected August employment report last week. China releases consumer and producer price data on Wednesday, while Germany publishes final August inflation figures on Thursday. UK gross domestic product data for July are due on Friday. US markets are closed on Monday for the Labor Day holiday.

  • Date
  • Author Shane Strowmatt, Senior Investment Writer
  • Reading time 5 minutes

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Asian equities advanced on Monday as renewed enthusiasm for artificial intelligence (AI) lifted semiconductor shares, while strong US employment data and higher oil prices sustained concerns about tighter Federal Reserve (Fed) policy. Korea’s KOSPI rose 4.3% and Japan’s Nikkei 225 increased 1.9%, after OpenAI’s GPT-6 Astra announcement strengthened expectations for AI infrastructure demand. Brent crude oil futures rose 1.2% to USD 97.39 per barrel following US strikes on Iranian oil tankers over the weekend. Mainland China’s CSI 300 gained 0.7%, while Hong Kong’s Hang Seng Index fell 1.1%, despite Beijing unveiling a CNY 360 billion package to reinforce state-owned banks and insurers. Gold declined 0.5% to around USD 4410 per ounce, while bitcoin slipped 0.2% to around USD 79,900.

US stocks retreat after jobs data

US stocks ended mixed on Friday after stronger-than-expected August hiring revived concerns that the Fed could raise interest rates, while geopolitical risks ahead of a long weekend also weighed on sentiment. The Dow Jones Industrial Average fell 0.5% to 53,414.25 points and the S&P 500 lost 0.4% to 7718.60 points, whereas the Nasdaq-100 gained 0.2% to 29,544.16 points. US nonfarm payrolls increased by 162,000 in August, the strongest gain since March and substantially exceeding economists’ expectations, while the unemployment rate held at 4.1%, data released on Friday showed. July’s result was revised to a gain of 21,000 from a previously reported decline of 23,000, while June’s increase was raised by 11,000 to 31,000. The strong payroll increase and steady unemployment rate suggest the labour market is resilient enough for the Fed to focus primarily on persistent inflation at its meeting later this month, as Fed Chair Kevin Warsh has advocated further action against price pressures while Governor Christopher Waller has suggested keeping rates unchanged if inflation continues to improve.

Euro-area retail sales decline in July, stocks mixed

Euro-area retail trade volume fell by 0.6% in July, reversing a revised 0.2% increase in June, Eurostat data released on Thursday showed. Sales were 0.6% higher than a year earlier, slowing from annual growth of 1.4% in June. The monthly decline reflected a 1.4% drop in non-food sales and a 0.8% fall in automotive-fuel purchases, while food, drink and tobacco sales rose 0.4%. Germany recorded the largest monthly fall among member states, with retail sales declining 3.4%. European equity markets were mixed on Friday, with the Euro Stoxx 50 gaining 0.2% and Germany’s DAX rising 0.2%, while France’s CAC 40 fell 0.1% and the Swiss Market Index was little changed.

Corporate and economic calendar

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

Economic data in focus: German industrial production (08:00), Swiss unemployment rate (09:00), Sentix investor confidence for the eurozone (10:30) and euro-area gross domestic product (11:00).

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Source: LGT Bank (Switzerland) Ltd.