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LGT Navigator: Stabilization, but far from all-clear

September 15, 2022

After the sharp price losses on Tuesday, the stock indices on Wall Street were at least able to stabilize again. However, in view of the persistent and broad-based upward pressure on prices, inflation and interest rate concerns remain the determining negative factors. The focus now shifts to the next interest rate step by the Federal Reserve (Fed) in the coming week.

Stabilization, but far from all-clear

In New York, the Dow Jones Industrial went out of trading at 31'135.09 points (+0.01%) virtually unchanged from the previous day's close. The S&P 500 gained +0.34% to 3'946.01 points and on the Nasdaq, indices gained about +0.8%. After the latest data published in the last two days on the development of consumer and producer prices in the U, hopes for an early easing of high inflation seem to have been dashed. As a result, the US central bank will have to raise interest rates further. The yield on ten-year US government bonds remained stable at 3.41%, while the US dollar traded just below parity against the euro.

In Asia, most stock indices trended moderately in positive territory. In Japan, the Nikkei 225 gained about +0.15%. According to the latest data, the Japanese trade balance showed the 13th consecutive month in deep red figures due to the increased cost of energy imports and the weak yen. The deficit reached a record EUR 19.5 billion in August. In mainland China, the Shanghai Composite climbed around +0.4% today and in Hong Kong, the Hang Seng is up nearly +0.5%.

Price pressure at producer level eases slightly in the US, but remains at high level

US producer prices have weakened in August about as expected. On an annual basis, the Labor Department in Washington communicated an inflation rate of +8.7% (consensus +8.8%). In July, the rate of increase in producer prices had still been +9.8%. In the core rate, i.e. excluding energy prices, the inflation rate amounted to +7.3%, well above the +7.0% forecast by analysts, but slightly lower than in the previous month at +7.7%. On a monthly basis, core producer prices rose by +0.4%. With both consumer price and producer price data showing persistent inflationary pressures, the Fed is likely to be doomed to tighten its monetary policy further. As a result, another hefty 75 basis point rate hike is expected next Wednesday.

Moderate decline in record high inflation in the UK

British consumer prices fell slightly in August from a very high level. On an annual basis, inflation was reported at +9.9% compared with +10.1% registered in July - the highest level in around 40 years. A decline in fuel prices had a dampening effect. However, the still strongly rising food prices kept up inflationary pressure. The British central bank is expected to tackle high inflation next week with a new interest rate hike.

Industry in the euro area significantly reduces production

Industrial production in the eurozone fell more sharply than economists had expected in July. On a monthly basis, output fell by -2.3%, while analysts had on average expected a decline of -1.1%. The production of capital goods fell particularly sharply by -4.2% compared with the previous month. On the other hand, however, industrial production in June was stronger than previously expected, rising by a revised +1.1% instead of the originally estimated +0.7%.

Economic Indicators September 15

MEZ Country Indicator Last period
08:00 GE Whole Sale Prices (August, y/y) +19.5%
08:45 FR Consumer Prices (August, y/y) +6.5%
11:00 EZ Trade Balance (July) EUR -24.6bn
14:30 US Retail Sales (August, m/m) 0.0%
14:30 US Import Prices (August, y/y) -1.4%
14:30 US Initial Jobless Claims (weekly) 233,000
14:30 US Philly Fed Manufacturing Index (September) -10.6
15:15 US Industrial Production (August, m/m) +0.6%


Earnings Calender September 15

Country Company Period
SWE H&M Q3 Sales
US Adobe Q3


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