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LGT Navigator: Continued recovery rally on stock markets

October 5, 2022

Inflation concerns and vague hopes of a more moderate interest rate course by the central banks, accompanied by lower bond yields, took a back seat to the strong start to the month on the international stock exchanges. However, the labor market data from the US due today and on Friday will subject the stock markets to a next reality check. For the time being, even increased geopolitical tensions following a missile test by North Korea were unable to do anything to dampen the optimistic mood on the trading floor.

Continued recovery rally on stock markets

On the New York Stock Exchange, the indices continued the recovery started at the beginning of the week. The Dow Jones Industrial climbed for the first time since September 22 above the mark of 30'000 points and closed +2.8% higher than the previous day at 30'316.32 points. Since Monday, the Dow thus shows a gain of a good +5%. The S&P 500 gained +3.06% to 3'790.93 points on Tuesday and the technology indices on the Nasdaq rose +3.14%. The announcement by Tesla CEO Elon Musk that he would now acquire Twitter for the originally agreed purchase price of around USD 44 billion attracted attention. The shares of the online service gained more than +22% after a short suspension from trading.

In the bond market, the yield of ten-year US Treasuries remained at 3.64%, well below the level of 4% reached last week.

Stocks in the Asia-Pacific region traded higher in midweek, joining the positive guidance from the US. The Nikkei 225 rose by +0.5% and exceeded the mark of 27'000 points. In Hong Kong, the Hang Seng index rose by around +5.5% after a holiday. The Hang Seng Tech index rose by more than +7%. The broadest MSCI index of Asia-Pacific equities outside Japan improved +2.4% from the previous day. Mainland Chinese markets remain closed for the “Golden Week”.

So far, the increased geopolitical tensions after the latest missile test by North Korea and the missiles fired in return by South Korea had little impact. North Korea had fired a medium-range ballistic missile some 4'500 kilometers over the northern Japanese island of Hokaido on Tuesday for the first time in nearly five years.

In the euro area, inflationary pressure at producer level remains unchecked

Prices paid by manufacturers in the euro zone rose by +43.3% on an annual basis in August, setting a new record. In the previous month, price inflation was +38%. According to Eurostat, the statistics office, producer prices continue to be driven primarily by energy prices, which rose by almost +12% compared to the previous month.

EU takes further step to disengage from Russian energy supplies

The finance and economy ministers of the European Union have agreed to provide EUR 20 billion from the Corona reconstruction fund for investments in the energy sector. The aim is to reduce dependence on fossil fuels from Russia and to invest more in renewable energies.

Economic Indicators October 5

MEZ Country Indicator Last period
08:00 GE Exports (August, m/m) -2.1%
08:00 GE Imports (August, m/m) -1.5%
08:45 FR Industrial Production (August, m/m) -1.6%
09:15 ES PMI Services (September) 50.6
09:45 IT PMI Composite (September) 49.6
09:50 FR PMI Composite (September) 51.2
09:55 GE PMI Composite (September) 45.9
10:00 EZ PMI Composite (September) 48.2
10:30 UK PMI Composite (September) 48.4
12:00 OPEC Press Conference
14:15 US ADP Payrolls (September) +132,000
14:30 US Trade Balance (August) USD -70.7bn
15:45 US PMI Composite (September) 49.3
16:00 US ISM Non-Manufacturing (September) 56.9


Earnings Calender October 5

Country Company Period
FR Kering Q3
UK Tesco H1


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