Skip navigation Scroll to top
Scroll to top

LGT Navigator: Difficult year end for investors

December 20, 2021

Following the series of central bank decisions last week, capital markets must come to terms with the fact that monetary policy is becoming more restrictive against the backdrop of increased inflationary pressure, and that the flood of liquidity is being stemmed. As a result, the start to the Christmas week on equity markets is characterized by losses. This week, only a few impulses from central banks or economic data are expected, which means that towards the end of the year, the focus is likely to be increasingly on liquidity in the markets. Market events continue to be overshadowed by the uncertain development of the pandemic and the effect of the Omicron variant. This means that a difficult year end lies ahead for investors.

Difficult year end for investors

On Wall Street, the indices went into the weekend with losses on Friday, with standard stocks under greater pressure than technology stocks. On Asia's stock exchanges, most stock indices are also trending in negative territory this morning. This despite Japan's central bank chief Haruhiko Kuroda assuring that it is still too early to consider normalizing monetary policy. Kuroda thus supports the view that Japan's central bank will lag other central banks in turning monetary policy around. In China, the central bank cut its key lending rate for the first time since April 2020 to support growth in a slowing economy. The central bank eased the one-year LPR by five basis points to 3.80%, while leaving the five-year LPR unchanged at 4.65%.

Eurozone inflation rate continues to climb

Consumer prices in the 19 eurozone countries rose by +4.9% in November on an annual basis. The inflation rate thus reached a new record level, or the highest value since the beginning of monetary union. In October, the annual inflation rate had still been +4.1%. Energy prices increased by +27.5% year-on-year. The core rate, i.e. excluding energy prices, rose from +2.0% in October to +2.6%. Last Thursday, at its last interest rate decision this year, the ECB reiterated its assessment that the massive increase in inflationary pressure was merely a temporary phenomenon but acknowledged rising risks regarding its inflation outlook.

Ifo business climate index falls to lowest level since February

The business climate barometer published monthly by Munich-based economic research institute Ifo dimmed for the sixth month in a row in December and now stands at 94.7 points (consensus 95.3), the lowest level since February this year. Consumer-related service companies and the retail sector are being hit hard by the worsening pandemic situation, Ifo commented. In manufacturing, on the other hand, sentiment had improved slightly despite ongoing supply bottlenecks for intermediate products and raw materials.

Russia's central bank raises key interest rate

The Russian central bank raised interest rates by 100 basis points to 8.5% in response to increasing inflationary pressure. In November, the inflation rate in Russia reached +8.4%. The Bank of Russia also held out the prospect of further interest rate steps.

Economic Indicators December 20

MEZ Country Indicator Last period
16:00 US Leading Indicator (November, m/m) +0.9%

 

Earnings Calender December 20

Country Company Period
US Nike Q2
US Micron Technology Q1

 

LGT helps you make informed investment decisions

All about global economic and market trends at a glance

Subscribe to LGT's research newsletters

You can also follow us on Facebook or LinkedIn – or visit MAG/NET and discover interesting background articles. If you have questions, a consultant from the bank will be happy to help you.

Imprint
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, +41 44 250 78 59, E-Mail: lgt.navigator@lgt.com
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.