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LGT Navigator: Cautious start to the week on capital markets

September 13, 2021

Uncertainties about the further course of the corona pandemic exacerbated by the delta variant, rising inflationary pressure and the associated foreseeable tightening of monetary policy, as well as the high valuation level on the stock markets, already caused caution among investors at the end of last week. This more cautious attitude of investors also seems to determine the start of the week.

Cautious start to the week on capital markets

On Wall Street, the indices ended the week on Friday with discounts. The Dow Jones Industrial declined by -0.78% to 34'607.72 points and thus recorded a loss of just over two percent in the trading week, which was shortened by a holiday. The S&P 500 also lost -0.77% on Friday and went out of trading at 4'458.58 points. On the Nasdaq technology exchange, the indices fell to the same extent, after they had reached record highs in the middle of last week. With excitement, the product presentation of Apple scheduled for tomorrow, Tuesday, is expected. Here, the new iPhone 13 should be presented as well as a new edition of the Apple Watch.

In Asia, the week began on the stock markets largely with losses. Here, too, especially the economic concerns against the background of the delta variant depressed the mood of investors. An article in the Financial Times, according to which Beijing intends to break up the popular payment app of Jack Ma's Ant Group, Alipay, attracted attention.

Inflationary pressure at producer level in the US continues to increase

Prices at the producer level in the United States continued to rise sharply. On an annual basis, prices rose +8.3% in August - the largest increase since 2010 - compared with +7.8% in July. Analysts had expected roughly this development. At the core rate, i.e. excluding energy prices in particular, US producer prices rose by +6.3% compared with the same period a year ago. Producers are feeling the impact of global supply problems and consequent material shortages. Inflation in producer prices usually feeds through to consumer prices with a time lag. In July, the official annual inflation rate for US consumer prices was +5.4%. The big question is whether this massive inflationary pressure is merely temporary or will take hold in the longer term.

Inflationary pressure also continues to rise in Germany

The trend in German consumer prices intensified further in August. Driven by rising energy prices and the effect of the temporary VAT cut, the inflation rate climbed from +3.8% in July to +3.9% - the highest level since 1993. In June, the inflation rate had still been +2.3%.

Russia’s central bank takes next interest rate step

The Russian central bank tightened its key interest rate for the fifth time in a row - this time by a quarter of a percentage point to 6.75%, to cope with rising inflationary pressure. Economists, on the other hand, had predicted an even bigger rate hike of 50 basis points. In August, the annual inflation rate reached +6.7%, well above the central bank's target of +4%. Against this background, central bank chief Elvira Nabiullina also held out the prospect of further interest rate hikes.


Economic Indicators September 13

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Earnings Calender September 13

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Source: LGT Bank (Switzerland) Ltd.

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