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LGT Navigator: Highly tense geopolitical situation

February 23, 2022

The renewed intensification of the Ukraine crisis due to the Kremlin's recognition of the two self-proclaimed “people's republics” in eastern Ukraine and the deployment of Russian troops continues to weigh heavily on stock market sentiment. A massive price slump was largely prevented, but the geopolitical situation remains highly tense. On a positive note, there was a noticeable brightening of the business climate in Germany, as shown by the latest Ifo business survey.

Highly tense geopolitical situation

On US stock markets, the indices came under pressure after the holiday-related long weekend on Tuesday. The Dow Jones Industrial closed almost -1.5% lower at 33'596.61 points and the market-wide S&P 500 went out with a daily loss of -1% at 4'304.76 points. In Europe, the aggravation of the Ukraine crisis has weighed on markets on Tuesday, but a feared massive price collapse failed to materialize. After initially stronger losses, markets stabilized over the day. The leading euro index EuroStoxx 50 turned at midday into the plus and went out virtually unchanged from the previous day at 3'987.84 points. In Asia, the negative sentiment continued only partially on Wednesday. While in Tokyo, the indices lost about -1.5%, Chinese stocks rose and in Hong Kong, the Hang Seng index trades about +0.7% higher.

The West responds with far-reaching sanctions

The United States and its allies are responding to Russia's latest escalation move with wide-ranging sanctions, and the US is moving additional soldiers and equipment to Eastern Europe. In Washington, US President Joe Biden called the latest escalation the beginning of an invasion and immediately announced sanctions against supporters of Putin and their families as well as Russian banks. In addition, trading in Russian government bonds is to be stopped. Furthermore, in the event of further escalation, Russia's exclusion from the international payment system Swift or export controls are to be considered. For its part, the European Union announced sanctions against Russia that are to come into force as early as today. The EU is putting members of the Russian parliament on the sanctions list, as well as other individuals and organizations close to the Russian government. In addition, the Russian state's access to EU financial markets is to be curtailed and EU trade with regions recognized by Moscow is to be restricted. The United Kingdom and Canada also adopted punitive measures against Russia. For his part, Ukrainian President Volodymyr Zelensky announced a partial mobilization of reservists.

Top diplomatic meetings canceled

The US government canceled a meeting scheduled for this Thursday in Geneva between US Secretary of State Antony Blinken and his Russian counterpart Sergey Lavrov. In addition, the White House ruled out for the time being the prospective top-level meeting between US President Biden and Russia's President Putin.

Germany puts Nord Stream 2 on ice

The German government in Berlin has halted the approval process for the Nord Stream 2 pipeline for the time being. Chancellor Olaf Scholz had instructed the Economics Ministry to withdraw the existing report analyzing the security of supply at the Federal Network Agency. This would mean that certification of the pipeline would not be possible, and Nord Stream 2 could not go into operation. Despite the further worsening of the crisis, Russia intends to maintain its gas supplies abroad. “Russia intends to continue uninterrupted supplies of this commodity, including liquefied natural gas, to world markets,” the Kremlin said.

German companies much more confident, according to Ifo survey

The mood of German companies improved noticeably in February. This is signaled by the much respected business climate barometer of the Munich-based economic research institute Ifo. The indicator climbed from 96.0 points at the beginning of the year to 98.9 points in February. The German economy is counting on an end to the corona crisis, but the Ukraine crisis remains a risk factor, Ifo commented.

Italy's inflation rate continues to rise

In Italy, the cost of living rose in January by the most since the introduction of the euro in 1999. Consumer prices increased by +5.1% for the year compared with an inflation rate of +4.2% in December. Energy costs remained the main price driver.


Economic Indicators February 23

MEZ Country Indicator Last period
08:00 GE GfK Consumer Climate (March) -6.7
08:45 FR Economic Indicator (February) +112.0
09:00 AUT Consumer Prices (January, y/y) +4.6%
10:00 SZ ZEW Economic Expectations (February)  +9.5
10:30 UK Bank of England Inflation Report
11:00 EZ Consumer Prices (January, m/m) +0.4%
11:00 EZ Consumer Prices (January, y/y) +5.0%
11:00 EZ Core Consumer Prices (January, y/y) +2.3%


Earnings Calender February 23

Country Company Period
GE Munich Re Annual
GE Henkel Annual
GE Puma Annual
FR Danone Annual
NL Stellantis Q4
IT Pirelli Q4
ESP Iberdrola Annual
UK Barclays Annual
UK Rio Tinto  Annual
UK Aston Martin Annual
AUT Wienerberger Annual
US Ebay Q4


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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, E-Mail:
Source: LGT Bank (Switzerland) Ltd.

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