Skip navigation Scroll to top
Scroll to top

LGT Navigator: Market sentiment remains tense ahead of Jackson Hole

August 25, 2022

Investors are hardly daring to come out of hiding at the moment, and the focus this week is solely on the upcoming appearance of Fed Chairman Powell at the central bank meeting in Jackson Hole. The central bank, above all the Fed, is faced with the major challenge of countering energy price-driven inflation with a more restrictive monetary policy on the one hand and preventing the fragile economy from sliding into recession on the other. No real impetus was provided by the latest data from US industry on new orders for durable goods or the latest figures from the real estate market in the US.

Market sentiment remains tense ahead of Jackson Hole

The Dow Jones Industrial closed Wednesday +0.18% higher at 32,969.23 points and the S&P 500 went out at 4,140.77 points (+0.29%). On the Nasdaq, the indices gained about +0.3%. The restraint before the highly anticipated appearance of Fed Chairman Jerome Powell at the symposium in Jackson Hole is noticeable on all sides. Powell is likely to emphasize that the Fed still has a long way to go in the fight against inflation, which means that further strong interest rate hikes can be expected. Among individual stocks, it was interesting to note that American fashion retailer Nordstrom beat expectations for second-quarter business performance, but disappointed investors' expectations with a cautious outlook. As a result, Nordstrom shares plummeted by -20%. This is likely to be a further indication of weaker private consumption in the US.

On the bond market, the yield on ten-year US Treasuries rose further to 3.11% shortly before the start of the Jackson Hole central bank meeting. On the foreign exchange market, the euro was able to free itself somewhat from the recent lows but continues to trade just below parity against the US dollar.

On Asia's stock exchanges, the stock indices recorded mostly gains ahead of the symposium in Jackson Hole, which begins today. In Hong Kong, trading initially had to be interrupted due to a typhoon warning. After resumption, the Hang Seng Index gained about +1.5%. In Shanghai, the Composite Index climbed about +0.4% and in Tokyo, the Nikkei 225 rose about +0.6%. China announced meanwhile further economic stimulus packages worth billions to stabilize the weakening economy. According to China's Premier Li Keqiang, the equivalent of around EUR 45 billion is to be made available for the expansion of infrastructure.

US industry reports weak order intake in July

In the United States, orders for durable goods (from washing machines to airplanes) were weaker than expected in July. Compared to the previous month, orders stagnated and thus disappointed analysts' expectations, who had expected a strong increase of +0.8%. On a positive note, however, orders in June were even stronger at +2.2% than initially reported at +2.0%. Orders for capital goods, excluding defense equipment and aircraft, which are indicative of business investment appetite, increased +0.4% in July from the previous month.

Pending home in the US sales drifting lower

Contracts signed to purchase existing homes fell -1% in July from the previous month and slumped nearly -20% for the year, the National Association of Realtors reported. The so-called pending home sales (Pending Home Sales) have thus fallen against the backdrop of higher mortgage rates in eight of the last nine months. According to the Realtors Association, however, a certain bottom may now have been reached, as the monthly declines have slowed.

Economic Indicators August 25

MEZ Country Indicator Last period
08:00 GE GDP Q2 (q/q) +0.2%
08:45 FR Economic Indicator (August) 106.0
10:00 GE Ifo Business Climate (August) 88.6
13:30 EZ ECB Minutes
14:30 US GDP Q2 (q/q) -0.9%
14:30 US Consumer Spending Q2 (q/q) +1.0%
14:30 US Initial Jobless Claims (weekly) 250,000
15:00 US Start Jackson Hole Central Bank Symposium

 

Earnings Calender August 25

Country Company Period
GE Fielman H1
IRL CRH H1
US Coty Q4

 

LGT helps you make informed investment decisions

All about global economic and market trends at a glance

Subscribe to LGT's research newsletters

You can also follow us on Facebook or LinkedIn – or visit MAG/NET and discover interesting background articles. If you have questions, a consultant from the bank will be happy to help you.

 

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.

 

Risk Disclosure (Disclaimer)
This publication is an advertising material / marketing communication. This publication is intended only for your information purposes. It is not intended as an offer, solicitation of an offer, or public advertisement or recommendation to buy or sell any investment or other specific product. The publication addresses solely the recipient and may not be multiplied or published to third parties in electronic or any other form. The content of this publication has been developed by the staff of LGT and is based on sources of information we consider to be reliable. However, we cannot provide any confirmation or guarantee as to its correctness, completeness and up-to-date nature. The circumstances and principles to which the information contained in this publication relates may change at any time. Once published information is therefore not to be interpreted in a manner implying that since its publication no changes have taken place or that the information is still up to date. The information in this publication does not constitute an aid for decision-making in relation to financial, legal, tax or other matters of consultation, nor should any investment decisions or other decisions be made solely on the basis of this information. Advice from a qualified expert is recommended. Investors should be aware of the fact that the value of investments can decrease as well as increase. Therefore, a positive performance in the past is no reliable indicator of a positive performance in the future. The risk of exchange rate and foreign currency losses due to an unfavorable exchange rate development for the investor cannot be excluded. There is a risk that investors will not receive back the full amount they originally invested. Forecasts are not a reliable indicator of future performance. In the case of simulations the figures refer to simulated past performance and that past performance is not a reliable indicator of future performance.

The commissions and costs charged on the issue and redemption of units are charged individually to the investor and are therefore not reflected in the performance shown. We disclaim, without limitation, all liability for any losses or damages of any kind, whether direct, indirect or consequential nature that may be incurred through the use of this publication. This publication is not intended for persons subject to a legislation that prohibits its distribution or makes its distribution contingent upon an approval. Persons in whose possession this publication comes, as well as potential investors, must inform themselves in their home country, country of residence or country of domicile about the legal requirements and any tax consequences, foreign currency restrictions or controls and other aspects relevant to the decision to tender, acquire, hold, exchange, redeem or otherwise act in respect of such investments, obtain appropriate advice and comply with any restrictions. In line with internal guidelines, persons responsible for compiling this publication are free to buy, hold and sell the securities referred to in this publication. For any financial instruments mentioned, we will be happy to provide you with additional documents at any time and free of charge, such as a key information document pursuant to Art. 58 et seq. of the Financial Services Act, a prospectus pursuant to Art. 35 et seq. of the Financial Services Act or an equivalent foreign product information sheet, e.g. a basic information sheet pursuant to Regulation EU 1286/2014 for packaged investment products for retail investors and insurance investment products (PRIIPS KID).