On Wall Street, the recovery continued, but remains marked by central bank policy. Support was provided by bank stocks, which benefited from the prospect of rising interest rates. The Dow Jones Industrial closed +0.61% higher at 31'774.52 points and the S&P 500 gained +0.66% to 4'006.18 points. On the Nasdaq, the indices rose by about +0.5%. The yield of ten-year US government bonds climbed to 3.32% after the interest rate decision of the ECB.
The markets in the Asia-Pacific region also rose at the end of the week. In Japan, the Nikkei 225 rises by about +0.5% and in South Korea, the Kospi gains +0.4%. Strongly performed on Friday the Hang Seng Index in Hong Kong, which is up +2.6%. On the Chinese mainland, the Shanghai Composite rises by +0.7%. Positive impetus was provided by the latest inflation data from China. Thus, inflationary pressure in China has surprisingly weakened in August. Consumer prices rose over the year by +2.5% and producer prices increased by +2.3% relatively moderate. This is likely to be due to lower consumption. This gives the Chinese central bank scope for further interest rate cuts to support the domestic economy.
With the increase of 75 basis points, the key interest rate at which commercial banks in the euro area can borrow fresh money from the ECB rises to +1.25%. The so-called deposit rate was raised to +0.75%. According to the ECB, the rate move “accelerates the transition from the current very accommodative level of policy rates to a level that ensures the timely return of inflation to the two percent medium-term objective.” With inflation expected to remain at high levels for longer, according to the ECB, ECB chief Lagarde held out the prospect of further rate hikes in the coming months. The inflation rate in the eurozone recently reached a record level of 9.1%. In view of the continuing pressure on energy prices, inflation must be expected to reach double digits in the coming months, Lagarde stressed.
According to the ECB, the inflation rate in the eurozone is expected to rise further. In its forecasts published yesterday, the central bank now expects an inflation rate of +8.1% this year, compared with the +6.8% still anticipated in June. Next year, inflation is then expected to fall to an average of +5.5% (June forecast: +3.5%). For 2024, the ECB still forecasts annual inflation of +2.3% (+2.1%). At the same time, the euro economy will grow more strongly in the current year than previously expected, namely by +3.1% (June forecast: +2.8%). In the following two years, however, a clearly weaker GDP growth rate of +0.9% (previously +2.1%) and +1.9% (+2.1%) is expected.
|08:45||FR||Industrial Production (July, m/m)||+1.4%|
|US||extraorord general meeting|
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, E-Mail: email@example.com
Source: LGT Bank (Switzerland) Ltd.
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