The US stock indices continued their recovery yesterday, driven in part by a renewed increase in demand for technology stocks after the recent correction. Buying sentiment was also boosted by the hope stirred up by the US President that a corona vaccine will soon be approved, as well as by good economic data. The Empire State Index, which measures the business conditions for industrial companies in the New York region, unexpectedly improved significantly. The index rose from 3.7 to 17 points in September, according to the Federal Reserve Bank of New York. Analysts had predicted an increase to 6.9 points. The Dow Jones Industrial closed virtually unchanged after the solid gains at the beginning of the week, while the S&P 500, which covers the entire market, climbed by +0.5% to 3 401.20 points. The technology-heavy Nasdaq 100 even rose by +1.43% to 11 438.87 points. Good economic data was also reported from China. Both industrial production and retail sales increased more than expected. Most Asian equities benefited from the brighter market sentiment and mostly reported moderate daily gains. Investors are now eagerly awaiting the Fed's monetary policy decision tonight.
The focus of financial markets today lies on the interest rate decision of the Federal Reserve (Fed). It is the first meeting after Fed Chairman Jerome Powell announced a strategy adjustment at the Jackson Hole symposium. In the process, the central bank has gained more flexibility with regard to inflationary developments. Investors are hoping that meeting will provide a first insight into what this adjustment could mean for future monetary policy. However, a change in the monetary policy course is not expected.
A group of 25 Republicans and 25 Democrats tried to break the blockade on Tuesday with a cross-party compromise proposal. The draft provides for support measures in the amount of USD 1.5 trillion. The Democratic leader of the House of Representatives, Nancy Pelosi, emphasized that the Democrats were prepared to postpone the recess of the session scheduled for early October in order to reach an agreement with the Republicans after all.
In China, the buying mood increased in summer. Chinese retailers recorded +0.5% more income in August than in the previous year – it is the first time this year that sales growth has resulted in a year-on-year comparison. This development is a signal that China's economy is slowly recovering from the corona shock. From January to August, the retailers took in -8.6% less. Online retailers, on the other hand, recorded a sales increase of 15.8% in the same period.
In Germany, financial experts are once again looking more positively into the future. The ZEW Indicator of Economic Sentiment improved surprisingly and rose by 5.9 points to 77.4 in September. This means that the barometer is now at its highest level since May 2000. Analysts had expected a decline to 69.5 points. The stock market professionals have a better assessment of the current economic situation in Germany in particular. In the second quarter, the German gross domestic product shrank by 9.7%. Market observers expect a noticeable recovery in the second half of the year.
In Italy and France, inflation fell significantly in August. Prices in Italy fell by -0.5% year-on-year, whereas the inflation rate in the previous month was still +0.8%. In France, inflation rose by +0.2% within a year. In July the inflation rate was +0.9%.
The industrialized countries are storing more crude oil than ever before: in July, stocks amounted to 3.23bn barrels, according to the International Energy Agency (IEA). The reason for this is the corona pandemic, which is dampening demand for the black gold. The lull is likely to continue. Thus, the IEA has revised its forecast downwards for the second time and expects a demand of 91.7m barrels per day for the current year. This is 200 000 barrels less than previously forecasted and 9.46m barrels a day less than in 2019.
|11:00||EZ||Trade Balance (July)||+EUR 17.14bn|
|14:30||US||Retail Sales (August)||+1.2%|
|16:00||US||NAHB Housing Market Index (September)||+78.0|
|20:00||US||FOMC monetary policy announcement||0.0-0.25%|
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, +41 44 250 78 59, E-Mail: firstname.lastname@example.org
Source: LGT Bank (Switzerland) Ltd.
Risk Disclosure (Disclaimer)
This publication is an advertising material / marketing communication. This publication is for your information only and is not intended as an offer, solicitation of an offer, or public advertisement to buy or sell any investment or other specific product. Its content has been prepared by our staff and is based on sources of information we consider to be reliable. However, we cannot provide any confirmation or guarantee as to its being correct, complete and up to date. The circumstances and principles to which the information contained in this publication relates may change at any time. Information that has been published should therefore not be understood as implying that no change has taken place since its publication or that it is still up to date. The information in this publication does not constitute an aid for decision-making in relation to financial, legal, tax-related or other consulting matters, nor should any investment decisions or other decisions be made on the basis of this information alone. It is recommended that advice be obtained from a qualified expert. Investors should be aware that the value of investments can fall as well as rise. Positive performance in the past is therefore no guarantee of positive performance in the future. Investments in foreign currencies are also subject to fluctuations in exchange rates. We disclaim all liability for any loss or damage of any kind, whether direct, indirect or consequential, which may be incurred through the use of this publication. This publication is not intended for persons subject to legislation that prohibits its distribution or makes its distribution contingent upon an approval. Any person coming into possession of this publication shall therefore be obliged to find out about any restrictions that may apply and to comply with them. In line with internal guidelines, persons responsible for compiling this report are free to buy hold and sell the securities referred to in this report.