Ahead of the Fed's expected rate hike (today 19:00 CET) and the subsequent press conference by Federal Reserve Chairman Jerome Powell (19:30), stock indices on Wall Street trended clearly positive, driven mainly by a sharp decline in oil prices. WTI and Brent oil fell below the USD 100 mark at times, but price developments will remain highly volatile and above all also depend on any statements on the course of the war in Ukraine. The Dow Jones Industrial closed +1.82% higher at 33'544.34 points and the broad S&P 500 gained +2.14% to 4'262.45 points. Gains were even stronger on the tech exchange Nasdaq, where the indices were up more than +3%. The yield on ten-year US government bonds traded at 2.16%, the highest level since mid-2019, ahead of the Fed's monetary policy decision.
In Asia, most stock indices joined the positive guidance from New York. In Tokyo, the Nikkei 225 index gains around +1.8% and in Hong Kong, the Hang Seng index put on an impressive daily rally with gains of up to +8%.
In the United States, inflationary pressures have continued to intensify. This is indicated by the renewed strong rise in producer prices, which increased by +10% on an annual basis in February – the strongest price increase since the start of the data series in 2010. Even at the core rate, i.e. excluding the sharp rise in energy prices, the inflation rate at the producer level remains high at +8.4% due to ongoing global supply chain problems and material shortages.
The Empire State index of the New York Federal Reserve fell by almost 15 points to minus 11.8 points in March. This puts the regional industrial indicator at its lowest level since May 2020. The consensus had assumed an improvement to plus 6.4 points. A reading above the zero line signals an increase in activity in the sector.
The US government, on US President Joe Biden's National Security Advisor Jake Sullivan's meeting with senior Chinese government official Yang Jiechi in Rome, expressed grave concern about Beijing's support for Russia and threatened China with “significant consequences”. The White House is concerned that China is providing military and economic aid to Russia, thereby supporting the Kremlin's war effort. Beijing and Moscow maintain a “strategic partnership,” and China has so far not condemned Russia's attack on Ukraine.
The Center for European Economic Research's (ZEW) monthly survey of professional financial experts' economic expectations for Germany plunged in March by the most since the survey began in late 1991, with the indicator plummeting 93.6 points to minus 39.3 against the backdrop of the war in Ukraine and inflation concerns. Analysts were surprised by the strength of the decline. The consensus was for a March reading of plus 5.0 points. According to the ZEW, geopolitical uncertainties and the sanctions against Russia are weighing heavily on the economic outlook for Germany and the risk of a recession has increased significantly. In contrast, the inflation expectations of analysts and institutional investors surveyed have risen significantly. The ZEW survey data showed a similar picture for the outlook for the eurozone.
In France, inflationary pressure continued to increase strongly in February. Whereas the annual inflation rate had been +3.3% at the beginning of the year, inflation last month was already +4.2%. Month-on-month, the cost of living rose by +0.9%.
|10:00||IT||Consumer Prices (February, y/y)||+6.2%|
|13:30||US||Retail Sales (February, m/m)||+3.8%|
|15:00||US||NAHB Real Estate Index (March)||+82.0|
|19:00||US||FOMC Monetary Policy Meeting||+0.25%|
|19:00||US||FOMC Economic Projections|
|19:30||US||Fed Press Conference|
|13:30||US||NY Fed Empire State Manufacturing (March)||+3.1|
|16.15||EZ||ECB President Lagarde speaks|
|US||Amercian Express||Investor Day|
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Source: LGT Bank (Switzerland) Ltd.
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