On the New York Stock Exchange, indices extended their losses at the beginning of the week in the face of rising yields in the bond market, hawkish statements by Fed officials, fierce turbulence in the currency markets and increased fears of recession, and investor nervousness remains palpable. The Dow Jones Industrial closed -1.11% lower at 29'260.81 points and at times fell to its lowest level since November 2020, while the S&P 500 lost -1.03% and exited trading at 3'655.04 points. On the Nasdaq, the losses were kept within narrower limits and the indices closed around -0.5% lower. In the bond market, the yield of the benchmark ten-year US government bond climbed to 3.91%, reaching the highest level in around twelve years.
After sharp price losses at the beginning of the week, the stock markets in Asia trended inconsistently on Tuesday. In Tokyo, the Nikkei 225 rose by +0.6%, while the Hang Seng in Hong Kong lost about -1% and the Hang Seng Tech Index fell by -1.7%. The Shanghai Composite in mainland China was about +0.3% higher than the previous day and South Korea's Kospi lost -0.6%.
Pound sterling plunged to a record low on Monday morning. This after the new British government under Prime Minister Liz Truss announced to implement the most comprehensive tax cuts since 1972 as well as further investment incentives to boost growth. As a result, the pound briefly fell to an all-time low of 1.0375 against the US dollar at the beginning of the week. The greenback, which is more attractive due to the widening interest rate differential, also extended its gains against the euro, pushing the European single currency down to 0.9555 in places – its lowest level since 2002.
German companies were once again more pessimistic in the latest survey by Munich-based economic research institute Ifo. The highly regarded business climate indicator for Europe's largest economy fell by 4.3 points to 84.3 in September. Analysts had on average expected a much more moderate decline to 87.0 points. According to the Ifo, the German economy is “sliding into recession”, as the business environment has deteriorated in all sectors considered. In the retail sector, business expectations had even fallen to a historic low. Ifo surveys around 9'000 German companies every month.
Christin Lagarde, president of the European Central Bank (ECB), stressed to the European Parliament that the ECB must continue to raise key interest rates at its next meetings to dampen demand and counter the risk of a persistent upward shift in inflation expectations. Inflation remains far too high and is likely to remain above our target for an extended period, Lagarde said. The ECB will next decide whether to tighten interest rates further on October 27.
|14:30||US||Fed Governor Powell speaks|
|14:30||EZ||ECB President Lagarde speaks|
|14:30||US||Durable Goods Orders (August, m/m)||-0.1%|
|15:00||US||S&P/CaseShiller House Prices 20-biggest cities (July, y/y)||+18.6%|
|16:00||US||Consumer Confidence (September)||103.2|
|16:00||US||New Home Sales (August, m/m)||-12.6%|
|SZ||Georg Fischer||Capital Markets Day|
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Source: LGT Bank (Switzerland) Ltd.
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