Asian stock exchanges start the week with losses and thus follow the weak guidelines from the US. In Tokyo, the Nikkei loses -1.4% and the Hang Seng is -1.1% weaker in Hong Kong. The Shanghai Composite loses -0.1%.
On Wall Street, the recovery ended after just one day and the main indices closed weaker on Friday. The S&P 500 lost -2.3% and the Dow Jones declined -1.3%. The Nasdaq Composite slipped -3.1%. Financial stocks were in focus after various banking heavyweights presented their quarterly results. While the shares of JPMorgan Chase, Citigroup and Wells Fargo ended the day in the plus, Morgan Stanley failed to convince, and the stocks dropped more than -5%.
The latest economic data were also mixed. Thus, the mood of US consumers has brightened somewhat in October, but pessimism remains high. In particular, the high inflation rate is weighing on consumer sentiment. In addition, the retail sales stagnated in September. Analysts had expected an average increase of 0.2% over the previous month.
This week, investors focus on more quarterly results, including Netflix, Tesla, Johnson & Johnson, AT&T, Verizon and Procter & Gamble.
Meanwhile, the political chaos in the United Kingdom continues. On Friday, Prime Minister Liz Truss fired her finance minister, Kwasi Kwarteng, after only 38 days in office. On the same day, she presented his successor: former Foreign and Health Minister Jeremy Hunt will take over the financial affairs of the kingdom with immediate effect. Hunt had applied to become party leader of the Conservatives himself in the summer, but had failed. Truss herself is also under enormous pressure to resign after only five weeks in office. So far, however, she has refused to do so.
However, Truss has partially withdrawn the massive tax cuts she announced. The planned fiscal package, called mini-budget by the government, has led to severe turbulence on the British financial markets in recent weeks. “We need to act now to convince the markets of our fiscal discipline,” Truss said Friday at a press conference in London. Accordingly, the corporate tax will now be increased after all. But she wants to hold on to other tax breaks. Whether that will succeed is questionable, however, because Hunt has already hinted over the weekend that there could be further changes to the government's tax plans. The prospects of billions in debt-financed tax relief triggered tremors on the British bond and currency markets at the end of September, forcing the Bank of England to intervene repeatedly to calm the markets.
Opening the Communist Party Congress, China's state and party leader Xi Jinping warned of “potential dangers” and difficult times ahead. In a two-hour speech to some 2300 delegates at the Great Hall of the People in Beijing on Sunday, the president called for people to prepare for the worst. “Therefore, gear up and be prepared to withstand strong winds, heavy seas and even dangerous storms,” he said. The next five years will be crucial for this. Xi also reiterated the intention to adhere to the zero-covid policy. The congress will continue until October 22, with the focus on expanding Xi Jinping's power and re-electing him for a third term. It is considered certain that parliament will re-elect Xi next March.
|05:00||China||Exports (September, y/y)||+2.5%|
|05:00||China||Imports (September, y/y)||+2.3%|
|06:30||JP||Industrial activity (August)||+2.7%|
|14:30||US||NY Empire State Index (October)||-1.5|
|US||Bank of America||Q3|
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, E-Mail: firstname.lastname@example.org
Source: LGT Bank (Switzerland) Ltd.
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