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LGT Navigator: Autumn mood on capital markets

October 5, 2021

Concerns about the development of the economy and inflation as well as the ongoing problems in global supply chains and, not least, the drama surrounding the ailing Chinese real estate group “Evergrande”, are currently keeping investors on their toes and creating an autumn mood on the stock markets. In addition, the Federal Reserve's expansionary monetary policy is increasingly likely to be curtailed. Against this backdrop, the yield on ten-year US government bonds also climbed back above the 1.5% mark at the start of the week.

Autumn mood on capital markets

In New York, the Dow Jones Industrial ended the day with a loss of almost -1% at 34'002.92 points (-0.94%). The S&P 500 gave up a little more and declined -1.3% to 4'300.46 points. Even heavier were the losses on the Nasdaq, where the indices lost a little more than -2%. The slightly better than expected incoming orders data from the US industry provided little impetus. The focus shifted to the tense situation on the oil market as Opec+ doesn't intend to increase its daily production more than planned in November despite the shortage on the world market. Higher oil prices are likely to push inflation expectations even higher and with them expectations of a more restrictive stance by central banks. The negative trend also continued in Asia on Tuesday. In Tokyo, the Nikkei 225 is down by around -2.5%. The broadest MSCI index of Asia-Pacific shares outside Japan fell during the trading day up to -1.3% and fell for the third consecutive day.

Momentum of economic recovery continues to slow, according to Sentix

The assessment of the further course of economic activity in the euro area has deteriorated for the third consecutive month, according to the latest findings of the German financial analysis company Sentix. The economic indicator weakened by 2.7 points in October compared with the previous month to 16.9 points. The market was expecting a smaller decline to 18.6 points. According to Sentix, the momentum of the economic recovery in the eurozone, as well as in the US and Asia, has slowed further. However, it is currently unclear whether this is merely an economic slowdown or even a trend reversal. Sentix points out that with the imminent curbing of the expansive monetary policy of the major central banks, one of the most important factors behind the economic upturn to date will lose significance.

ECB top representative reiterates; inflationary pressure not sustainable (for now)

European Central Bank Governing Council member Ignazio Visco assumes that the sharp rise in inflationary pressure in the euro area will not be sustainable. According to the Italian central bank chief, it can be assumed that wages will not rise dramatically in view of the still high unemployment rate due to the pandemic and that the increase in inflation will therefore not be permanent. However, the central banker also conceded that long-term issues such as digitalization or the energy transition could cause price dynamics to change.


Economic Indicators October 5

MEZ Country Indicator Last period
08:45 FR Industrial Production (August, m/m) +0.3%
09:15 SP IHS Markit PMI Services (September) 60.1
09:45 IT IHS Markit PMI Composite (September) 59.1
09:50 FR IHS Markit PMI Composite (September) 55.1
09:55 GE IHS Markit PMI Composite (September) 55.3
10:00 EZ IHS Markit PMI Composite (September) 56.1
10:30 UK IHS Markit PMI Composite (September) 54.1
11:00 EZ Producer Prices (August, y/y) +12.1%
14:30 US Trade Balance (August) USD -70.1bn
15:45 US IHS Markit PMI Composite (September) 54.5
16:00 US ISM PMI Non-Manufacturers (September) 61.7
17:00 EZ ECB President Lagarde Speech


Earnings Calender October 5

Country Company Period
US Pepsico Q3 


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