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LGT Navigator: Investors remain cautious ahead of the kick-off to earnings season

October 11, 2022

US stockmarkets continue their downward spiral into the new trading week. The Bank of England announces further measures to support pension funds. Former Federal Reserve chairman Ben Bernanke is awarded the Nobel Prize in Economics.

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At the start of the week, Wall Street resumed its downward trend from Friday. Once more, technology stocks remain under pressure. After the good labor market report, investors are focusing this week on new data on the development of US consumer prices, which will be published on Thursday. In addition, caution dominates ahead of the upcoming earnings season. The S&P 500 lost -0.8% on Monday and the Dow Jones was down -0.3%. The Nasdaq Composite slipped -1% to close at its lowest level since July 2020.

Asian stock markets show a mixed picture on Tuesday. In Hong Kong, the Hang Seng loses more than -2% and in Tokyo, the Nikkei also trades significantly weaker with -2.6%. The Shanghai Composite trades virtually unchanged from the previous day.

Bank of England offers more support for pension funds

The Bank of England (BoE) has made adjustments to its current program to support the domestic bond market. Thus, the BoE confirmed on Monday that it intends to stop buying long-dated government bonds – known as gilts – by the end of this week as planned. The central bank had launched the purchase program at the end of September to stop the sell-off of in UK government debt after the new government under Prime Minister Liz Truss surprisingly announced a tax cut package. Now, the BoE stated that it had so far undershot the planned purchase volume of GBP 5 billion per day significantly. The daily purchase amount could therefore be increased to exhaust the GBP 40 billion volume. In addition, the BoE has announced another temporary program, aimed at securing the liquidity of pension funds as they have come under heavy pressure during the market turmoil. However, the moves failed to calm markets, with yields on 30-year gilts jumping to as high as 4.64%, from 4.39% on Friday. 

IMF and World Bank warn of global recession

The annual meeting of the International Monetary Fund (IMF) started in Washington on Monday. Until Sunday, politicians, central bankers and representatives of development agencies will discuss, among other things, climate change, the fight against poverty and global food security. In their opening remarks, the IMF and the World Bank warned of the risk of a global recession. Economic growth is slowing in some industrialized countries in Europe, World Bank chief David Malpass said Monday. IMF chief Kristalina Georgieva made similar comments. The IMF will present its new growth forecasts for the global economy today. In recent months, it had repeatedly revised estimates downward. 

Ben Bernanke awarded Nobel Prize in Economics

The three US economists Ben Bernanke, Douglas Diamond and Philip Dybvig were honored with the Nobel Prize in Economics as the Royal Swedish Academy of Sciences in Stockholm announced on Monday. Bernanke, the former chairman of the Federal Reserve, and the other two economists received the honor for their research on banks and financial crises. The laureates' work proved invaluable during the 2008 crisis that brought the global financial system to the brink of collapse, said John Hassler, economist at Stockholm University. The Nobel Prize in Economics has been endowed by the Swedish Riksbank since the late 1960s and is not one of the classic Nobel Prizes, as it is the only one that doesn't go back to the prize's founder, Alfred Nobel.

Economic Indicators October 11

MEZ Country Indicator Last period
01:50 JP Current account
08:00 UK Unemployment rate (Aug) 3.6%

 

Earnings Calender October 11

Country Company Period
CH Givaudan Q3 Sales
FR LVMH Q3 Sales

 

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

 

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