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LGT Navigator: Stabilization at the beginning of the week

June 21, 2022

Despite a lack of impetus from the US markets, which remained closed at the beginning of the week due to the “Juneteenth” holiday, European stock indices stabilized after the losses of the previous week. However, concerns about recession and inflation continued to dominate the mood on capital markets.

Stabilization at the beginning of the week

The EuroStoxx 50 closed Monday with a daily gain of +0.91% at 3'469.83 points. In London, the FTSE 100 went out of trading with a plus of +1.5%. In Asia, stock markets also tend to be mostly friendly. In Tokyo, the 225 Nikkei index gains about 2.5% and in Hong Kong, the Hang Seng is up about +1.5%.

ECB President Lagarde reaffirms prospect of interest rate turnaround

Europe's top central banker Christine Lagarde confirmed to the European Parliament's Economic and Monetary Affairs Committee the ECB's intention to raise its key interest rate at the next monetary meeting on July 21 for the first time since the corona crisis and to gradually normalize monetary policy thereafter. The turnaround in interest rates is already expected on financial markets and is urgent in view of a record high inflation rate of +8.1% in the eurozone. Regarding the impact of tighter monetary policy on the economy, Lagarde does not expect a recession. The conditions for further growth are in place and a recession is not part of the ECB's baseline scenario, she said.

US discusses oil price cap

In Washington, US Treasury Secretary Janet Yellen is negotiating with partners and allies on a price cap for oil (gasoline tax holiday) as a way to limit Russia's oil export revenues and prevent negative effects on the global economy. With a price cap, Western sanctions on Russian energy sources can be strengthened and the price of Russian oil can be pushed down. At the same time, however, more oil could enter the international market and prevent side effects on developing countries currently struggling with high food and energy prices, Yellen said during a visit to Canada.

KOF survey predicts significantly higher inflation in Switzerland

The Swiss Institute for Business Cycle Research (KOF) at ETH Zurich left its growth forecast for the Swiss economy, based on a survey of economists, unchanged, but revised its inflation forecast for the current year sharply upward. The economists now expect GDP to grow by +2.5% this year, with an inflation rate of +2.6%. Previously, an average inflation rate of +2.0% had been anticipated. Next year, price pressure is expected to weaken again and the institute forecasts an inflation rate of +1.7% for 2023 (previously +1.1%). The economy is expected to grow by +1.6% next year (previously +1.7%). Between May 31 and June 15 (i.e. before the SNB decision), 18 economists took part in the regular KOF consumer survey.

Bundesbank expects significantly lower growth

According to Bundesbank calculations, the German economy will achieve GDP growth of +1.9% in the current year. This means that the recovery after the corona crisis appears to be continuing, but uncertainties surrounding the war in Ukraine and ongoing supply chain problems are still having a negative impact. At the end of last year, the Bundesbank was still forecasting GDP growth of +4.2% this year. For 2023, the central bank now expects a growth rate of +2.4% (previous forecast +3.2%).

Economic Indicators June 21

MEZ Country Indicator Last period
14:30 US Fed Chicago National Activity Index (May) +0.47
16:00 US Existing Home Sales (May, m/m) -2.4%


Earnings Calender June 22

Country Company Period
SWE Volvo Capital Markets Day


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Source: LGT Bank (Switzerland) Ltd.

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