In New York, the Dow Jones Industrial closed Thursday at 30'076.68 points, losing -0.35% from the previous day's close. During the trading day, the Dow fell below 30'000 for the first time in three months. The S&P 500 fell -0.84% to 3'757.99 points and on the Nasdaq technology exchange, the indices fell by about -1.2%. In the bond market, quotations came under further pressure and the yield on the benchmark ten-year US government bonds rose to 3.7% – the highest level since 2011.
In the Asia-Pacific region, stock indices fell sharply at the end of the week. While in Japan because of a holiday the stock exchanges remained closed, the Hang Seng Index in Hong Kong loses about -0.9%. The Shanghai Composite trades around -1.1% lower and the Shenzhen Component gives -1.8%. In Australia, the S&P/ASX 200 falls -2.3% after returning to trading after a holiday, its lowest level since July. In South Korea, the Kospi loses around -1.8%. The broadest MSCI index for Asia-Pacific shares outside Japan notes a daily minus of -1.4%. The inflationary pressure has also increased significantly in Asia, as evidenced by the latest data from Singapore, where the annual inflation rate reached +7.5% in August, the highest level in 14 years.
For the first time since 1998, the Japanese Ministry of Finance intervened directly in the foreign exchange market to support the domestic currency. The yen had fallen to its lowest level against the US dollar in 24 years. Tokyo said it was very concerned and would continue to monitor developments. Yesterday, Japan's central bank had left its expansionary monetary policy unchanged, while the other major central banks continued to raise interest rates. This further weakened the yen. This morning, the Japanese yen is trading just above 142 against the greenback.
Britain's central bank stepped up its fight against high inflation by raising interest rates for the seventh time in a row. As expected, the key interest rate was raised by 50 basis points to +2.25%. However, the decision was not unanimous. Of the nine council members, three voted for an even larger rate hike of 75 basis points and one voted for a more moderate tightening of 25 basis points. Inflation in the UK is now close to +10% and the central bank expects inflation to rise further.
As anticipated by the financial markets, the Swiss National Bank (SNB) raised its key interest rate by 75 basis points to +0.5%, thus ending the eight-year phase of negative interest rates. In view of the increasing inflationary pressure in Switzerland as well, SNB President Thomas Jordan held out the prospect of further interest rate hikes.
Norges Bank is also fighting inflation with a further tightening of interest rates. As expected, the central bank in Oslo raised its key interest rate by 50 basis points to +2.25%.
According to ECB Executive Board member Isabel Schnabel, the ECB will have to raise interest rates further to combat inflation in the euro area. How big the next interest rate step will be on Oct. 27 and up to which level the central bank will have to raise key rates cannot be said now, Schnabel said in an interview. He said the ECB is taking a sighted view and must reassess economic and inflation data before making any decision. The ECB will fight inflation resolutely and ensure that inflation settles back at the targeted 2% level in the medium term, he said.
|09:00||ES||GDP Q2 (q/q)||+1.1%|
|09:15||FR||PMI Composite (September)||50.4|
|09:30||GE||PMI Composite (September)||46.9|
|10:00||EZ||PMI Composite (September)||48.9|
|10:30||UK||PMI Composite (September)||49.6|
|15:45||US||PMI Composite (September)||44.6|
|17:30||GE||Bundesbank President Nagel speaks|
|17:30||SZ||SNB President Jordan speaks|
|20:00||US||Fed Chairman Powell speaks|
|SZ||Georg Fischer||Capital Markets Day|
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Source: LGT Bank (Switzerland) Ltd.
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