Skip navigation Scroll to top
Scroll to top

LGT Navigator: Cautiously optimistic market sentiment as the year draws to a close

December 23, 2021

As 2021 draws to a close, investors in the equity markets remain cautiously optimistic ahead of the Christmas weekend, despite acute corona concerns. Looking ahead to the new year 2022, the focus is likely to remain on the development of the pandemic and further vaccine development, inflation and disruptions in global supply chains as well as the monetary policy turnaround of central banks and, last but not least, mega issues such as climate change or digitalization. Geopolitical tensions should also not be underestimated and must remain on investors' radar.

Cautiously optimistic market sentiment as the year draws to a close

On the New York trading floor, it remained relatively quiet shortly before the Christmas holidays and indices extended their gains again in the middle of the week. The Dow Jones Industrial rose by around three quarters of a percent, posting a gain of just over one percent so far this week. The S&P 500 closed just under one percent higher and on the Nasdaq, the technology indices also posted solid daily gains, driven by Tesla shares, among others. Tesla CEO Elon Musk had said in an interview that he had now reached the target of selling more than ten percent of his Tesla shares. On the Asian stock exchanges, most stock indices continued the positive guidance from the US and Europe and presented themselves friendly on Thursday.

Over the Christmas holidays and the week until the turn of the year, no significant economic data will be published, and the central banks have already positioned themselves in advance. New impetus will then provide the results of the purchasing managers surveys at the start of the year.

US economy held up better than expected in Q3

The US economy grew somewhat more strongly in the third quarter than had been assumed in previous estimates. According to revised data from the Bureau for Economic Analyses, the world's largest GDP expanded at an annualized rate of +2.3% from the previous quarter. The last calculation had shown +2.1%. This means that the pace of growth has slowed significantly compared with the previous quarter. In Q2, an annualized growth rate of +6.7% was reported. Private consumption was stronger than expected in Q3, increasing by +2.0% instead of the +1.7% initially reported. 

More recent data point to a further slowdown in the final quarter. For example, the Chicago Fed's economic activity barometer (Chicago Fed National Activity Index) fell back to +0.37 points in November from +0.75 points in October. From a value of zero, the CFNAI signals economic growth at historical trend levels.

Uncertainties in the ECB inflation outlook

According to ECB Executive Board member Isabel Schnabel, the significant increase in inflationary pressures in the eurozone could last longer than the ECB had expected. However, she said that the ECB still expects inflation to decline over the next year. The question, however, is how fast and how strong the decline will be. There is an upside risk in the ECB's inflation outlook, central bank director Schnabel commented in an interview with French newspaper “Le Monde.” In the official forecast, the ECB currently expects an average inflation rate of +3.2% next year and a decline to +1.8% in 2023. The normalization of monetary policy must be a gradual process, she said, because if the ECB reacts too quickly, there is a risk that the economic recovery will be stifled by a too abrupt tightening of financing conditions.

Economic Indicators December 23

MEZ Country Indicator Last period
08:00 GE Import Prices (November, m/m) +3.8%
09:00 ESP GDP Q3 (q/q, revision) +2.0%
10:00 IT Business Climate (December) +116.0
10:00 IT Consumer Confidence (December) +117.5
14:30 US Consumer Spending (November, m/m) +1.3%
14:30 US Personal Income (November, m/m) +0.5%
14:30 US PCE Core (Inflation) Index (November, y/y) +4.1%
14:30 US Durable Goods Orders (November, m/m) -0.4%
16:00 US Consumer Confidence (December) +71.7
16:00 US New Home Sales (November, m/m) +0.4%

 

Earnings Calender December 23

Country Company Period
GE Douglas Q4
CAN Blackberry Q3

 

LGT helps you make informed investment decisions

All about global economic and market trends at a glance

Subscribe to LGT's research newsletters

You can also follow us on Facebook or LinkedIn – or visit MAG/NET and discover interesting background articles. If you have questions, a consultant from the bank will be happy to help you.

Imprint
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, +41 44 250 78 59, E-Mail: lgt.navigator@lgt.com
Source: LGT Bank (Switzerland) Ltd.

Risk Disclosure (Disclaimer)
This publication is an advertising material / marketing communication. This publication is for your information only and is not intended as an offer, solicitation of an offer, or public advertisement to buy or sell any investment or other specific product. Its content has been prepared by our staff and is based on sources of information we consider to be reliable. However, we cannot provide any confirmation or guarantee as to its being correct, complete and up to date. The circumstances and principles to which the information contained in this publication relates may change at any time. Information that has been published should therefore not be understood as implying that no change has taken place since its publication or that it is still up to date. The information in this publication does not constitute an aid for decision-making in relation to financial, legal, tax-related or other consulting matters, nor should any investment decisions or other decisions be made on the basis of this information alone. It is recommended that advice be obtained from a qualified expert. Investors should be aware that the value of investments can fall as well as rise. Positive performance in the past is therefore no guarantee of positive performance in the future. Investments in foreign currencies are also subject to fluctuations in exchange rates. We disclaim all liability for any loss or damage of any kind, whether direct, indirect or consequential, which may be incurred through the use of this publication. This publication is not intended for persons subject to legislation that prohibits its distribution or makes its distribution contingent upon an approval. Any person coming into possession of this publication shall therefore be obliged to find out about any restrictions that may apply and to comply with them. In line with internal guidelines, persons responsible for compiling this report are free to buy hold and sell the securities referred to in this report.