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LGT Navigator: La France a voté – Macron secures second term in office

April 25, 2022

In the race for the highest office in Europe's second-largest economy, incumbent Emmanuel Macron prevailed over right-wing challenger Marine Le Pen with 58.5% vs. 41.5%. Macron guarantees Europe a certain political and economic stability in troubled and difficult times. On the financial markets, the anticipation of the monetary policy stance of the major central banks, the still muddled situation in Ukraine, and inflation and economic concerns remain the defining issues. However, further impetus will be provided this week by further quarterly reports from major listed companies.

La France a voté – Macron secures second term in office

On the New York Stock Exchange the expectation of rapidly and sharply rising interest rates dominated on Friday, after recent statements by Federal Reserve Chairman Jerome Powell had held out the prospect of a more aggressive inflation defense, respectively larger interest rate steps. The Dow Jones Industrial fell before the weekend by almost -2.82% to 33,811.40 points and thus recorded a full minus of almost two percent for the week. The S&P 500 fell by -2.77% to 4,271.78 points and the technology exchange was down almost four percent. At the same time, the yield on ten-year U.S. government bonds remained at 2.86%, close to the highest level since the end of 2018 of almost three percent reached last week.

In Asia's equity markets, the prospect of fast-rising key interest rates in the US makes for a clearly negative start to the week. In Tokyo, the 225-stock Nikkei index loses around -2% and in Hong Kong, the Hang Seng index posts a daily loss of around -3%.

The new week is dominated by the ongoing corporate reporting season, US GDP data due on Thursday, European inflation figures due on Friday and the Bank of Japan's monetary policy meeting.

Purchasing managers' indices provide mixed signals

In the eurozone, private sector sentiment improved again somewhat in April. This was mainly due to a more optimistic assessment of service companies. The S&P Global purchasing managers' index improved by 0.9 points to 55.8, while analysts had expected a decline to 53.9 points.

In the UK, however, companies surveyed in April were more pessimistic. The Purchasing Managers' Index (PMI Composite) for the services and industrial sectors fell more sharply than expected from 60.9 to 57.6 points (consensus 58.7). Sentiment was dampened by the rise in the cost of living, the Ukraine conflict and rising interest rates, S&P Global Chief Economist Chris Williamson said.

Bundesbank fears recession in case of energy embargo

Germany's Bundesbank believes that a comprehensive energy embargo against Russia would plunge the German economy into recession. Accordingly, real gross domestic product would decline by around two percent in the current year compared to the previous year, the central bank states in its current monthly report. But not only in the short term, but also in the following two years, a supply freeze would burden the German economy and lead to growth losses. In addition, higher inflation must be expected over a longer period due to rising energy prices, the Bundesbank commented.

  

Economic Indicators April 25

MEZ Country Indicator Last period
10:00 GE Ifo Business Climate (April) 90.8
14:30 US Chicago Fed National Activity Index (March) +0.51

 

Earnings Calender April 25

Country Company Period
SZ Roche  Q1 Sales
GE Deutsche Boerse Q1 
FR Vivendi Q1 Sales
NL Philips Q1 
US Coca-Cola Q1
US Whirlpool Q1 

 

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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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