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LGT Navigator: Negative news flow prevails

December 21, 2021

The spreading of the corona variant Omicron and the still uncertain epidemiological impact, as well as the threat of lockdowns, are causing headaches for investors. In addition, the trend towards monetary tightening by the major central banks and the threat of failure of US President Joe Biden's multibillion-dollar stimulus package after Democratic Senator Joe Manchin declared he would not support it, are weighing on investors. As a result, Goldman Sachs has already lowered its growth forecast for the US economy.

Negative news flow prevails

On the New York Stock Exchange, stock indices continued their negative trend, posting daily losses of just over one percent. The negative news flow with Omicron, central bank turnaround and the likely failure of the US stimulus package, at least in its original volume, currently prevails and dominates investor sentiment. The convincing quarterly results of Nike didn't help either. The sporting goods manufacturer increased sales and profits in Q2 despite ongoing supply chain issues and lower sales in China.

Green light in EU for Novavax's corona vaccine

The EU's European Medicines Agency (EMA) has cleared the way for approval of the corona vaccine “Nuvaxovid” from US manufacturer Novavax. Following approval by the EU Commission, the fifth corona vaccine will thus be available in the EU. After a thorough evaluation, the expert commission responsible for the vaccine had concluded that the EU criteria on efficacy, safety and quality were met. The EU had secured up to 200 million doses of the vaccine in August. According to studies, the protection against infection is about 90%. The Novavax vaccine is neither mRNA-based, as from Pfizer/Biontech or Moderna, nor a vector vaccine, as from Astrazeneca and Johnson & Johnson, but contains particles composed of a laboratory-produced version of the spike protein of Sars-CoV-2.

US economic trend remains solid

The composite index of leading economic indicators in the United States, with a stronger-than-expected gain of +1.1% in November, signals a solid growth trend over the next six months. Already in October, the Leading Indicator of the New York based economic research institute Conference Board increased by +0.9%. The index contains ten different indicators, such as consumer confidence or building permits as well as initial jobless claims or new orders in industry.

Change of leadership at the Bundesbank

Economist Joachim Nagel (55) is to become the new president of the Bundesbank. Finance Minister Christian Lindner has nominated Nagel to succeed Jens Weidmann. Weidmann had announced in October that he would step down at the end of the year for personal reasons after more than ten years in office. Nagel had already served on the Bundesbank's Executive Board from 2010 to 2016 before moving to the development bank KfW and then to the Bank for International Settlements (BIS). Finance Minister Lindner stressed that Nagel, as an experienced personality, would ensure the Bundesbank's continuity and that the importance of a stability-oriented monetary policy had increased in view of the existing inflation risks. At the same time, the Bundesbank warned in its latest monthly report that economic output could weaken significantly in the final quarter of 2021 due to the pandemic measures as well as material bottlenecks in industry. Meanwhile, inflation is likely to remain above +4% in the coming months.

Economic Indicators December 21

MEZ Country Indicator Last period
08:00 GE GfK Consumer Climate (January) -1.6
10:30 UK Retail Sales (November, m/m) +0.8%
11:00 IT Producer Prices (November, y/y) +20.4%
16:00 EZ Consumer Confidence (December) -6.8


Earnings Calender December 21

Country Company Period
GE Douglas Q4
CAN Blackberry Q3


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Source: LGT Bank (Switzerland) Ltd.

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