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LGT Navigator: The air is probably getting thinner at the heights

October 22, 2021

After the Dow Jones set another new record at midweek, the increasingly challenging environment with inflation and economic concerns in view of supply chain problems and exploding energy prices, as well as disappointing quarterly figures from technology giant IBM, are causing increased restraint among stock investors. On the stock exchanges in Asia, positive news about the ailing Chinese real estate group Evergrande provided some relief, at least in the short-term. The challenging environment and the record highs on Wall Street are likely to make the air increasingly thin for a further rise.

The air is probably getting thinner at the heights

On the New York Stock Exchange, the Dow Jones Industrial closed at 35'603.08 points (-0.02%) virtually unchanged from the previous day, when the benchmark index had still left behind the previous high of mid-August. Disappointing quarterly figures from IBM and rising yields in the bond market dampened the mood somewhat and weighed on the index. The yield on the futures contract of ten-year US government bonds reached its highest level in five months on Thursday. Nevertheless, the broad S&P 500 reached a record high in the meantime and left the day's trading at 4'549.78 points +0.3% higher. On the Nasdaq, the indices rose by about +0.7%, driven by gains in Netflix and Tesla.

Evergrande gains some air, at least in the short term

In Asia, the Chinese real estate developer Evergrande was once again in the spotlight. After the company, which is in payment difficulties, was able to meet an interest payment, the worries have eased somewhat, which provided some confidence, especially on China's stock exchanges.

Jobless claims fall to lowest level since mid-March 2020

Weekly initial claims for unemployment insurance fell slightly in the week ending October 16. Compared with the previous week, the number of claims fell by 6'000 to 290'000 claims, the lowest level since mid-March 2020. The more meaningful four-week moving average decreased by about 15'000 to 319'750 applications on a weekly basis. That left 2.481 million Americans receiving unemployment benefits as of October 9, 122'000 fewer than the week before.

Philly Fed hints at slowdown in US industry

The Federal Reserve's regional industrial activity barometer for the US East Coast metropolis of Philadelphia hinted at a moderate slowdown. The so-called Philly Fed indicator fell back to 23.8 points from 30.7 points in August, but still signals a growth trend with a value above zero.

Turkish central bank cuts key interest rate by 200 basis points

Turkey's central bank has eased its key interest rate from 18% to 16% despite an inflation rate of almost 20%. The unexpectedly drastic interest rate move is likely due to constant criticism from President Recep Tayyip Erdogan. As a result, the Turkish lira came under considerable pressure and fell to record lows against the Euro and the US dollar.

 

Economic Indicators October 22

MEZ Country Indicator Last period
08:00 UK Retail Sales +1.9%
09:15 FR IHS Markit PMI Composite (October) 55.3
09.30 GE IHS Markit PMI Composite (October) 55.5
10:00 EZ IHS Markit PMI Composite (October) 56.2
10:30 UK IHS Markit PMI Composite (October) 54.9
12:00 EU State and Government heads meeting
15:45 US IHS Markit PMI Composite (October) 55.0

 

Earnings Calender October 22

Country Company Period
SZ Sika Q3 
SZ Rieter Q3 
SZ Biotech Q3 
FR Renault Q3
FR Remy Cointreau Q3 Sales
US American Express Q3
US Honeywell Q3
US Schlumberger Q3

 

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Imprint
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, +41 44 250 78 59, E-Mail: lgt.navigator@lgt.com
Source: LGT Bank (Switzerland) Ltd.

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