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Markets stabilize to finish a weak week, look ahead to central bank decisions

Stock markets managed to squeeze out mild gains to finish Friday’s session, despite suffering during the week. For most of last week, concerns about growth prospects in China and Europe dampened market sentiment, but this week investors’ focus is likely to shift toward central banks with a European Central Bank (ECB) policy rate decision due on Thursday and a Federal Reserve (Fed) decision set for next week.

Shane Strowmatt, LGT
Reading time
5 minutes
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In New York, stock indices closed slightly in positive territory, despite being under pressure most of the week. The Dow Jones Industrial gained 0.2% and the S&P 500 put on 0.1% during Friday’s session. The Nasdaq-100 also closed 0.1% higher on Friday.

In Europe, stocks also managed to stabilize at the end of the week with the Stoxx Euro 600 finishing Friday’s session up 0.2%, breaking a seven-day losing streak.

In Asia, stock markets were mixed to start the new week. In China consumer prices appeared to be stabilizing with deflationary pressures easing. The Consumer Price Index (CPI) increased 0.1% for August on Monday when compared with the same month a year earlier. It was down 0.3% when compared with July. Hong Kong's Hang Seng Index slipped 0.9%, while markets in mainland China were doing much better with the Shanghai Composite up around 1%. Shares of Chinese tech giant Alibaba were tumbling 2.7% after the company said its departing chief executive officer will not leave the company as originally announced to focus on its cloud business.

Outside of China, Tokyo’s Nikkei 225 was trading down 0.5%, while in South Korea, the Kospi gained 0.2%. In Australia, the S&P/ASX 200 was trading 0.3% higher on Monday.

Gas futures in Europe spiked at the end of the week after strikes began at two Chevron liquefied natural gas (LNG) facilities in Australia, which account for around 7% of global supply. The jump in LNG prices comes in the same week when Brent oil prices broke the 90-dollar mark with oil prices marching higher since June. High energy prices are a concern for central banks, which are still trying to bring inflation down to target levels. The energy market situation is particularly interesting in Europe after the continent saw spikes in prices last year due to supply concerns surrounding the war in Ukraine.

Data released last week showed consumer prices in Germany were remaining stubbornly high. Inflation, measured by the Consumer Price Index, was 6.1% in August when compared with the same month a year earlier. That is slightly lower than the 6.2% figure from July. Higher energy and food prices were at the root of the price increases as well as a base effect related to a reduced fare train ticket available last year in Germany, which drove inflation up, the Federal Statistical Office said. Germany’s DAX closed Friday’s session up 0.1%.

Corporate news in focus: Roche’s Pharma Day 2023, first-quarter figures from Oracle.

Economic data in focus: Italian industrial production (10:00 CET).


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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

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