After technology stocks on Wall Street already came under pressure on Monday, the sell-off initially continued on Tuesday in Asia and Europe. The background to this is the growing concern among investors of an uncontrolled rise in inflation and a hasty turnaround in interest rates by the central banks triggered by this. This could lead to rising financing costs for companies and subsequently make bonds more attractive compared with equities. In New York, shares on the Nasdaq technology exchange then recovered after a weak start to trading. The Dow Jones Industrial lost -1.36%, from the record high reached just the day before, - the largest daily loss since February 26 - and closed at 34'269.16 points. The S&P 500 fell -0.87% to 4'152.10 points, while the Nasdaq was able to contain initial losses (of around -2.5%): the Nasdaq 100 ended the trading session at 13'351.27 points (-0.06%). At the same time, the yield on ten-year US government bonds moved up to 1.63%.
Given the high level of nervousness in the capital markets regarding inflation expectations, the latest data on consumer price inflation in the United States will be the focus of attention this afternoon at 14:30 (CET). Economists are forecasting a strong increase in consumer prices. However, the trend is also consumed by current supply bottlenecks as well as statistical base effects due to the pandemic-related price decline a year ago. Analysts forecast a significantly higher overall inflation rate of +3.6% (previous month +2.6%) and a core rate (excluding energy and food prices) of +2.3% (March +1.6%).
Analysts and institutional investors surveyed monthly by the Center for European Economic Research (ZEW) in Mannheim were significantly more optimistic in their assessment of the economic outlook for Germany. The ZEW index of economic expectations climbed from 70.7 points in April to 84.4 points in May, thus reaching its highest level since February 2000. Analysts had not expected any improvement. In addition to the outlook, however, the assessment of the current economic situation also improved. This indicator rose from 40.1 to 48.8 points. According to the ZEW, the assessment for the euro economy has also improved analogously.
After years of legal wrangling, the administration under President Joe Biden has now cleared the way for the first large wind farm off the coast of New England with 84 wind turbines. The government gave final approval to the controversial Vineyard Wind project yesterday. The facility is expected to create about 3'600 jobs and provide electricity for 400'000 homes and businesses.
|08:00||GE||Consumer Prices (April, y/y)||+2.1%|
|08:00||UK||GDP Q1 (q/q)||+1.3%|
|08:00||UK||Industrial Production (March, y/y)||-3.5%|
|08:45||FR||Consumer Prices (April, y/y)||+1.7%|
|11:00||EZ||Industrial Production (March, y/y)||+1.6%|
|14:30||US||Consumer Prices (April, m/m)||+0.6%|
|14:30||US||Consumer Prices (April, y/y)||+2.6%|
|14:30||US||Core Consumer Prices (April, y/y)||+1.6%|
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Source: LGT Bank (Switzerland) Ltd.
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