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Stocks mostly lower ahead of inflation data and central bank decisions

Stock markets ended Tuesday’s session mostly lower with the negative sentiment spilling over into Asian markets in early Wednesday trading. Investors were taking positions ahead of US inflation data due out Wednesday - which is seen as decisive for the Federal Reserve (Fed) interest rate decision next week - and a European Central Bank (ECB) monetary policy decision to be announced tomorrow. Market participants are evenly split between another interest rate hike or a pause in the ECB’s hiking cycle.

Shane Strowmatt, LGT
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5 minutes
Mixed markets
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In New York, stock indices fell again on Tuesday after recovering at the start of the week. The Dow Jones Industrial fell only marginally, supported by banks (the benchmark KBW Bank Index was up +1.7%) and oil giant Chevron (+1.9%). The S&P 500 lost 0.6%. The tech-heavy Nasdaq 100 dropped 1.1%. In individual stocks, Apple shares fell 1.7% on Tuesday after the tech company revealed the latest version of its iPhone but did not raise prices for the world’s most popular mobile phone series.

In Asia, stock markets were mostly down on Wednesday as trader interpreted macroeconomic data releases. In Japan, the Reuters Tankan poll showed weak confidence among Japanese companies. Confidence among large manufacturers dropped in September to 4 from 12 points the previous month while the value for non-manufacturing firms slipped by 9 points to 23 points. On a more positive note, producer prices were still coming down - for the eighth month in a row. The corporate goods price index increased 3.2% in August, down from 3.4% in July. The Nikkei 225 was marginally lower in early afternoon trading.

Beyond Japan, South Korea was also in focus as unemployment was logged at 2% in August, the lowest level since the 1990s. The Kospi was trading flat Wednesday afternoon. Hong Kong's Hang Seng Index was marginally lower, while the Shanghai Composite led regional losses, falling 0.8%. In Australia, the S&P/ASX 200 was down 0.7%.

The poor economic data of recent weeks kept pouring in for Europe’s largest economy on Tuesday. An assessment of the Germany economy by industry experts as part of a September survey by the ZEW economic research institute fell to minus 79.4 points, down 8.1 points from the previous month. It was a three-year low. The forward-looking ZEW Indicator of Economic Sentiment remained in negative territory but increased by 0.9 points to minus 11.4 points. After emerging from recession early this year, Germany only managed to pull off economic stagnation in the second quarter of the year. At the same time, inflation has remained stubbornly high with consumer prices increasing 6.1% in August when compared with the same month last year.

Corporate news in focus: Logitech annual general meeting.

Economic data in focus: UK gross domestic product (08:00 am CET), UK trade balance (08:00 am), US Consumer Price Index (02:30 pm), weekly US EIA Petroleum Status Report (04:30 pm).


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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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