After Friday's significant recovery, economic worries slowed down the stock indices on Wall Street again at the start of the week. The Dow Jones Industrial closed virtually unchanged at 32'223.42 points (+0.08%) and the broad S&P 500 fell -0.39% to 4'008.01 points. The technology exchange Nasdaq was down just over one percent. The growth concerns are based on the one hand, on the fear that the Federal Reserve could plunge the economy into recession with further sharp increases in key interest rates and, on the other hand, that the zero-covid strategy in China will further burden supply chains and thus weaken the global economy. In addition, the conflict with Russia and the war in Ukraine are causing continued uncertainty, particularly due to the impact on energy prices.
Asian stock markets are trading broadly higher today, with Hong Kong stocks leading the region. The Hang Seng is up about +2.3%, while Japan's Nikkei 225 is up about +0.5% and the Shanghai Composite is about +0.4% higher than the previous day.
The gold price remained under pressure at the beginning of the week, but then recovered to around USD 1'820 by this morning. On Monday, the price of a troy ounce of gold on the commodity exchange in London fell back to USD 1'787, its lowest level since the end of January. Since mid-April, the gold price has already been trending south and has since lost around nine percent in value. Gold is burdened primarily by the stronger US dollar, which benefits from the prospect of further interest rate increases by the Federal Reserve.
As reported by the New York Federal Reserve, the mood of industrial companies in the region deteriorated significantly in May. The Empire State index slumped 36.2 points to minus 11.6. Analysts had expected a decline to plus 15.0 points.
Swedish Prime Minister Magdalena Andersson sees the Scandinavian country moving into a new era after committing to NATO membership. Stockholm wants to submit the application together with Finland in the next few days, she said.
The EU Commission has significantly corrected its forecast for the European economy against the backdrop of the ongoing war in Ukraine. It said the eurozone economy would grow by +2.7% in the current year. This is significantly less than the +4.0% previously forecast. Regarding inflation, the Brussels executive expects average inflation of +6.1%. This is almost twice as much as in the previous forecast.
Private households in Germany expect inflationary pressure to increase further. This is the result of a recent survey by the Bundesbank. Over the next twelve months, an inflation rate of +6.9% is anticipated – a significant increase on the +5.8% expected in March. Thus, inflation expectations in this time frame reached the highest level since 2019. With a time horizon of five years, the inflation expectation is +5.2%. Currently, the inflation rate in Germany is +7.4% and in the euro area +7.5%. Rising inflation expectations are likely to put the European Central Bank (ECB) under increasing pressure to complete the interest rate turnaround soon.
Meanwhile, wholesale prices in Germany also continued to rise at a record pace. In April, an annual price increase of just under +24% was recorded, the strongest rise since the start of the data series in 1962. Significantly higher prices were recorded for petroleum products, ores, and metals in particular, but also for cereals, seeds and animal feed.
According to the EU Chamber of Commerce, European companies operating in China are heavily burdened by the ongoing restrictions of the strict pandemic measures. Companies need predictability, but the situation is unpredictable, said Jörg Wuttke, chairman of the EU Chamber of Commerce in China.
|07:30||FR||Unemployment Rate (Q1)||7.4%|
|08:00||UK||Unemployment Rate (March)||3.8%|
|11:00||IT||Consumer Prices (April, y/y)||+6.6%|
|11:00||EZ||GDP Q1 (q/q)||+0.2%|
|14:30||US||Retail Sales (April, m/m)||+0.7%|
|15:15||US||Industrial Production (April, m/m)||+0.9%|
|16:00||US||NAHB Housing Market Index (May)||+77.0|
|19:00||EZ||ECB President Lagarde speaks|
|20:00||US||Fed Governor Powell speaks|
|US||Moderna||Science & Technology Tag|
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, E-Mail: email@example.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.