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LGT Navigator: Markets up despite expecting continued monetary tightening

November 23, 2022

Stock markets were trading up Wednesday after a strong close in the US on Tuesday. The jump comes even as markets have received a slew of signals that central banks may raise interest rates longer and faster than many investors had expected. Wednesday could be a busy trading day as the week is cut short in the US due to the long Thanksgiving weekend beginning Thursday. Impulses are likely to come from Purchasing Managers’ Indexes from several G7 countries, US consumer sentiment and the Federal Open Market Committee meeting minutes.

Markets up despite expecting continued monetary tightening

In New York, stock markets made strong gains Tuesday. The Dow Jones Industrial ended the day +1.18% at 34,098.10 points. The S&P 500 gained +1.36% to finish at 4,003.58 points. Indices on the Nasdaq were up roughly +1.5%.

In Asia, equity markets were mixed. Hong Kong’s Hang Seng gained +0.57%. The Shanghai Composite lost -0.19% and the Shenzhen Component declined -1.22%. There was no trading in Tokyo due to a holiday in Japan.

Decelerating global growth to hit Europe hardest

Europe is likely to be hit harder than other parts of the world as global economic growth slows next year, according to the Organisation for Economic Cooperation and Development (OECD). The group sees global economic growth slowing to +2.2% next year from +3.1% this year. In particular, the war in Ukraine and high energy prices are weighing on Europe’s economic growth. However, the OECD forecasts the eurozone will still likely dodge a recession with +0.5% growth next year. The bloc’s largest economy, Germany, is nevertheless expected to contract by -0.3% in 2023.

New Zealand raises interest rates by record amount

Investors watching more than just the US Federal Reserve and European Central Bank for clues as to where global monetary policy is headed received a clear signal from New Zealand’s central bank on Wednesday. The Reserve Bank of New Zealand raised the official cash rate to 4.25%, a hike of 75 basis points, which is the fastest pace in the institution’s history. The bank also predicted a recession in the country beginning in the second quarter of 2023, which will likely last until early 2024.

 

Economic Indicators November 23

CET Country Indicator Last period
09:15 FR Composite Purchasing Managers' Index (November) 50.2
09:30 GE Composite Purchasing Managers' Index (November) 45.1
10:00 EZ Composite Purchasing Managers' Index (November) 47.3
10:30 UK Composite Purchasing Managers' Index (November) 48.2
14:00 US Building permits (November) +1.4%
14:30 US Initial jobless claims (weekly) 222,000
15:45 US Composite Purchasing Managers' Index (November) 48.2
16:00 US Consumer sentiment (November) 52.7
16:00 US New home sales (October) -10.9%
20:00 US FOMC minutes

Earnings Calender November 23

Country Company Period
CH Credit Suisse (extraordinary general meeting)
US Deere & Co Q4

 

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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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