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LGT Navigator: Hopes of diplomatic progress fizzled out again

March 15, 2022

Sentiment on stock markets initially brightened somewhat at the beginning of the week, supported by cautious optimism regarding diplomatic progress in the Ukraine war and lower oil prices. However, hopes for a breakthrough in direct talks between the warring parties quickly turned back to disappointment. In addition to the development of the geopolitical crisis, the interest rate decision of the Federal Reserve, which is due tomorrow evening, is now increasingly taking center stage.

Hopes of diplomatic progress fizzled out again

The recovery on the European stock exchanges at the start of the week did not continue in New York. The skepticism that a solution would be offered in the war in Ukraine seems too great. The Dow Jones Industrial remained on Monday at 32'945.24 points virtually unchanged from Friday's close. For some relief provided lower quotations in the price of oil. The S&P 500, on the other hand, fell by -0.74% to 4'173.11 points by the close of trading and on the Nasdaq technology exchange, the indices fell by almost -2% in the run-up to the anticipated first interest rate hike by the Fed. Chinese tech companies listed in the US in particular were under heavy pressure. For example, the shares of the Chinese online group Alibaba lost a good -10%.

On the bond market, the yield on ten-year US government bonds climbed to 2.14%, reaching its highest level since mid-2019.

In Asia, most stock indices trended in negative territory on Tuesday, weighed down by geopolitical uncertainties and the renewed Covid-19 wave in China.

Another round of talks between Russia and Ukraine without tangible results

The fourth round of negotiations between Russia and Ukraine – this time via video – represented a renewed attempt to find a way out of the conflict. So far, however, without tangible results. At least the will for direct talks still seems to exist. Whether the negotiations will bear fruit, however, seems highly questionable in view of the ongoing heavy fighting in Ukraine. US President Joe Biden, meanwhile, is sending his security adviser Jake Sullivan to Rome for talks with senior Chinese government officials to discuss the Ukraine war. According to the White House, the goal is to keep channels of communication open.

Rising inflation and Ukraine conflict slow down Swiss economy

According to the latest forecasts by the State Secretariat for Economic Affairs (Seco), economic development in Switzerland is currently being hampered by higher prices and geopolitical uncertainties. The federal government's group of experts is now forecasting GDP growth of +3.05% in the current year. In the last forecast three months ago, the outlook was still +3.2%. For 2023, Seco continues to expect economic growth of +1.7%. The indirect effects of the war in Ukraine in the form of higher energy prices and industrial metals had a particularly negative impact. International inflationary pressure is therefore expected to remain high. However, the appreciation of the Swiss franc is limiting price pressure. The outlook presented yesterday assumes an annual inflation rate of +1.9% in 2022, compared with the previous projection of +1.1% in December.

ECB not satisfied with banks' disclosure of climate and environmental risks

The European Central Bank (ECB) points out in a recent report that eurozone banks have so far failed to meet expectations in terms of climate change risk disclosure. While there have been improvements since the end of 2020, European commercial banks need to adjust their practices without delay, it said, as regulation of climate and environmental risk disclosure will become stricter in the coming years. The overall level of transparency is still insufficient, according to the ECB.


Economic Indicators March 15

MEZ Country Indicator Last period
08:00 GE Wholesale Prices (February, y/y) +16.2%
08:00 UK Unemployment Rate (January) 4.1%
08:45 FR Consumer Prices (February, y/y) +3.3%
11:00 GE ZEW Economic Expectations Investors (March) +54.3
11:00 EZ Industrial Production (January, m/m) +1.2%
13:30 US Producer Prices (February, y/y) +8.3%
13:30 US NY Fed Empire State Manufacturing (March) +3.1
16.15 EZ ECB President Lagarde speaks


Earnings Calender March 15

Country Company Period
GE Volkswagen Annual
GE RWE Annual
GE Fraport Annual
SWE H&M Q1 Sales
IT Generali Annual


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