On the New York Stock Exchange, the short-term positive trend continued in midweek. The Dow Jones Industrial closed +0.71% higher at 35'160.79 points. The S&P 500 exited Wednesday at 4'459.45 points, virtually unchanged from the previous day (-0.06%). The indices on the Nasdaq technology exchange also could not hold the previous day's gains and closed around -1.5% lower. Among other things, the streaming service Netflix, which disappointed investors in the past quarter with the first decline in subscriptions in more than ten years, caused a stir on Wall Street. The share fell at times by almost -30%. The slump also affected other entertainment stocks. Walt Disney fell by -5.6% and the share of the audio streaming service Spotify fell by almost -11%. On the other hand, the reaction to the Q1 results of the computer group IBM, which exceeded expectations, was positive. The stock rose by about +7%.
In the bond market, the yield on ten-year US government bonds fell back slightly to 2.85%, after previously registering almost 3%, the highest level since the end of 2018.
In Asia, stock indexes in mainland China and Hong Kong slipped on Thursday on economic concerns, but then found support from a decline in longer-term US Treasury bond yields. In Tokyo, however, the Nikkei 225 rose by about +0.8%.
The regular economic report of the Federal Reserve, the so-called Beige Book, attested the US economy a “moderate” growth, making the wording slightly more positive than at the beginning of March. However, the Fed stressed that inflationary pressures remain high and the war in Ukraine is causing sharp price increases for energy, metals, commodities, and agricultural products. In addition, there are ongoing supply chain issues.
China's central bank refrained from easing key interest rates, despite economic concerns heightened by pandemic restrictions and supply chain problems. As a result, the benchmark rate for one-year bank loans remained unchanged at 3.7% and the rate for five-year loans remained at 4.6%. Most analysts had expected a slight cut in key interest rates.
The European Central Bank (ECB) could raise key interest rates as early as July amid rising inflation risks, according to Martins Kazaks, head of the Central Bank of Latvia. Alluding to ECB President Christine Lagarde's statement that the exit from expansionary monetary policy will be “gradual,” the central banker said in an interview with Bloomberg that “gradual” does not mean slow, but “the policy measures taken must be appropriate.” In the eurozone, inflation peaked at +7.5% in March.
Bundesbank President and ECB Governing Council member Joachim Nagel also assumes the possibility that the ECB could raise key interest rates as early as the summer due to high inflation. A first interest rate step is possible at the beginning of the third quarter, Nagel commented at the spring meeting of the International Monetary Fund in Washington.
The already strong rise in producer prices in Germany accelerated further in March. On an annual basis, the price level increased by almost +31% – the strongest increase since the start of the data series in 1949! Producer prices continue to be driven primarily by energy costs, which rose by +84% year-on-year against the backdrop of the war in Ukraine. Natural gas prices even rose by +145%.
|08:45||FR||Economic Perspectives (April)||106.0|
|09:00||AUT||Consumer Prices (March, y/y)||+6.7%|
|11:00||EZ||Consumer Prices (March, y/y)||+7.5%|
|11:00||EZ||Core Consumer Prices (March, y/y)||+3.0%|
|14:30||USA||Philly Fed Manufacturing Indicator (April)||+22.7|
|14:30||USA||Initial Jobless Claims (weekly)||185,000|
|16:00||US||Leading Indicator (March)||+0.3%|
|16:00||EZ||Consumer Sentiment (April)||-18.7|
|17:00||US||Fed Governor Powell speaks|
|18:30||UK||Bank of England Governor Bailey speaks|
|19:00||EZ||ECB President Lagarde speaks|
|US||Philip Morris International||Q1|
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Source: LGT Bank (Switzerland) Ltd.
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