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LGT Navigator: Wall Street shakes off economic worries

August 16, 2022

At the beginning of the week, the international stock markets were initially dominated by a mood of caution. The focus was on negative economic news from China and an easing of monetary policy by the Chinese central bank, which heightened concerns about weakening economic growth. In addition, renewed tensions between the US and China created uncertainty. On Wall Street, however, the recent upward trend nevertheless continued, supported by hopes of an end to the rise in inflation and subsequently more moderate interest rate increases.

Wall Street shakes off economic worries

Despite the negative economic news, the Dow Jones Industrial rose at the beginning of the week and reached 33,912.44 points (+0.45%), the highest value in almost three and a half months. Since mid June the Dow thus trades about +14% higher. The S&P 500 gained +0.4% and went out at 4,297.14 points. On the Nasdaq, the indices gained about +0.75%.

Asia's stock markets benefited in part from the positive guidance from the US, but no consistent trend was observed. In Tokyo, the 225-value Nikkei index was unchanged from the previous day. While in Hong Kong, the Hang Seng lost about -0.5%, the Composite Index in Shanghai increased by +0.2%.

Meanwhile, the geopolitical tensions intensified again. Thus, China has announced new maneuvers around Taiwan out of anger over the visit of another delegation of the US Congress in Taipei. Taiwan's President Tsai Ing-wen received five members of Congress led by Democratic Senator Ed Markey on Monday.

New York manufacturing barometer falls to lowest level since May 2020

The Federal Reserve Bank of New York's Empire State index signaled a significant deterioration in sentiment in the region's industrial sector, plunging 42.4 points. At minus 31.3 points, the widely followed leading indicator is now at its lowest level since May 2020. According to the Fed's data, a sharp decline in new orders and shipments were particularly responsible.

Sentiment on US housing market clouds over more than expected

The National Association of Home Builders' (NAHB) housing market index indicated a continued deterioration in US housing market sentiment with a renewed weakening – the eighth consecutive monthly decline. The indicator fell six points to 49.0 in August, its lowest reading since May 2020, while analysts on average had expected a smaller decline to 54.0. According to NAHB, the background is the tighter financing conditions and higher prices.

 

Economic Indicators August 16

MEZ Country Indicator Last period
08:00 UK Unemployment Rate (June) 3.8%
11:00 GE ZEW Economic Expectations (August) -53.8
11:00 EZ ZEW Economic Expectations (August) -51.1
11:00 EZ Trade Balance (June) EUR -26.3bn
14:30 US Housing Starts (July, m/m) -2.0%
14:30 US Building Permits (July, m/m) +0.1%
15:15 US Industrial Production (July, m/m) -0.2%

 

Earnings Calender August 16

Country Company Period
AUS BHP Group Jahreszahlen
US Walmart Q2
US Home Depot Q2
US Agilent Technologies Q3

 

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

 

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