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LGT Navigator: Interest rate worries weigh on stock market sentiment

August 9, 2022

The prospect of a further rise in interest rates was underpinned once again by the strong US labor market report and is causing caution on the stock markets. The focus is now shifting to the latest consumer price data expected in the middle of the week from the US, which will provide information on the inflation trend and the direction of the US Federal Reserve. 


In New York, the Dow Jones Industrial went out of trading virtually unchanged at 32,832.54 points (+0.09%), while the S&P 500 fell by -0.12% to 4,140.06 points. On the Nasdaq technology exchange, a disappointing result from Nvidia weighed on sentiment and the indices fell by about -0.4%. 

In Asia, the stock markets have shown no clear direction on Tuesday. In Tokyo, the Japanese benchmark index Nikkei 225 is down by almost -1%, while the indices in Hong Kong and Shanghai were slightly higher. 

Economic outlook for eurozone slightly improved according to Sentix

According to the latest survey results of the financial analysis company Sentix, the outlook for the euro economy brightened in August, contrary to expectations. The economic indicator climbed from minus 26.4 to minus 25.2 points, breaking away from the two-year low reached in July. Analysts had on average expected a further decline to minus 29.0 points. 

EU gas emergency plan enters into force

The European emergency plan to prepare for a possible halt in Russian natural gas supplies enters into force today. The plan calls for all EU countries to voluntarily reduce their gas consumption by 15% from the beginning of August until March next year, compared to the average consumption of the past five years during this period. Against the backdrop of the Ukraine war, Russia has already drastically reduced its supplies to the EU and a complete supply freeze cannot be ruled out.    

Italian government bonds under increased pressure

After the rating agency Moody's lowered the outlook for Italy's credit rating (Baa3) to negative at the end of last week, yields on Italian government bonds rose at the beginning of the week. Ten-year government bonds yielded over 3% at times. In the run-up to the parliamentary elections scheduled for September 25, Italy is thus threatened with a fall into the “junk” range. 


Economic Indicators August 9

MEZ Country Indicator Last period
14:30 US Productivity Q2 (q/q, ex agrar)  -7.3%
14:30 US Unit Labor Cost Q2 (q/q) +12.6%


Earnings Calender August 9

Country Company Period
SZ Alcon Q2
GE Munich Re  Q2
GE Continental H1
US Warner Music Group Q3


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