The European Central Bank (ECB) will try to send a strong signal in the fight against high inflation today at 2:15 p.m. (CET) with a second interest rate hike of presumably 75 basis points. In doing so, ECB chief Christine Lagarde is walking a delicate tightrope, as sharp and rapidly rising interest rates could put countries such as Italy in financing difficulties. That is why every word Lagarde says at the press conference at 2:45 p.m. is likely to be weighed in the balance. In addition to the anticipated interest rate move, the rationale and the outlook for the further monetary policy path, the ECB will also present updated economic and inflation forecasts. The ECB's announcement could cause some strong reactions on the capital markets, especially in the case of the already battered euro or the bond yields of the euro periphery countries
Europe's stock markets are dominated by fears of an energy crisis and a recession because of a more restrictive monetary policy. Ahead of the ECB's interest rate decision, the EuroStoxx 50 closed virtually unchanged at 3'502.09 points (+0.06%) on Wednesday. The euro climbed back above parity against the US dollar. According to traders, the common currency was supported by lower natural gas and oil prices.
In New York, the mood brightened somewhat in midweek, driven by demand for technology stocks. Thus, the indices on the Nasdaq rose by about +2%. The Dow Jones Industrial rose +1.4% to 31'581.28 points and the broad S&P 500 went out of trading at 3'979.87 points (+1.83%). Apple's product event, where the new iPhone 14 and a more robust Apple Watch Ultra were unveiled, attracted attention. However, the reaction on the trading floor was limited.
Economic growth in the eurozone was stronger than previously expected in the first half of the year. In the second quarter, the gross domestic product of the 19-euro countries expanded by +0.8% compared with the previous quarter. In the previous estimate, a growth rate of +0.6% had been calculated. In the first quarter, the euro economy also performed better than initially expected. According to Eurostat, GDP grew by +0.7% in the first three months (previous estimate +0.5%).
In its economic report published yesterday evening, the Beige Book, the Federal Reserve emphasized that the American economy is heading for difficult times due to high prices and a lack of labor in many areas. However, there is at least some hope that the upward trend in prices is slowing down. The Beige Book is based on a Fed survey of businesses across the country. Recent statements by high-ranking Fed officials suggest that the pace of interest rate policy will remain unchanged. For example, Fed Vice Chairman Lael Brainard emphasized that the central bank must raise interest rates to a restrictive level and leave them there for some time. The yield on ten-year US government bonds eased slightly to 3.28%.
The US foreign trade deficit narrowed to USD 70.65 billion in July from USD 80.88 billion the previous month. This marks the fourth consecutive decline, bringing the deficit to its lowest level this year. American exports increased by +0.2%, but imports fell sharply by -2.9%.
|07:45||SZ||Unemployment Rate (August)||2.2%|
|14:15||EZ||ECB Monetary Policy Announcement||+0.5%|
|14:30||US||Initial Jobless Claims (weekly)||232,000|
|14:45||EZ||ECB Press Conference|
|15:10||US||Fed Governor Powell speaks|
|16:15||EZ||ECB President Lagarde speaks|
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, E-Mail: firstname.lastname@example.org
Source: LGT Bank (Switzerland) Ltd.
Risk Disclosure (Disclaimer)
This publication is an advertising material / marketing communication. This publication is intended only for your information purposes. It is not intended as an offer, solicitation of an offer, or public advertisement or recommendation to buy or sell any investment or other specific product. The publication addresses solely the recipient and may not be multiplied or published to third parties in electronic or any other form. The content of this publication has been developed by the staff of LGT and is based on sources of information we consider to be reliable. However, we cannot provide any confirmation or guarantee as to its correctness, completeness and up-to-date nature. The circumstances and principles to which the information contained in this publication relates may change at any time. Once published information is therefore not to be interpreted in a manner implying that since its publication no changes have taken place or that the information is still up to date. The information in this publication does not constitute an aid for decision-making in relation to financial, legal, tax or other matters of consultation, nor should any investment decisions or other decisions be made solely on the basis of this information. Advice from a qualified expert is recommended. Investors should be aware of the fact that the value of investments can decrease as well as increase. Therefore, a positive performance in the past is no reliable indicator of a positive performance in the future. The risk of exchange rate and foreign currency losses due to an unfavorable exchange rate development for the investor cannot be excluded. There is a risk that investors will not receive back the full amount they originally invested. Forecasts are not a reliable indicator of future performance. In the case of simulations the figures refer to simulated past performance and that past performance is not a reliable indicator of future performance.
The commissions and costs charged on the issue and redemption of units are charged individually to the investor and are therefore not reflected in the performance shown. We disclaim, without limitation, all liability for any losses or damages of any kind, whether direct, indirect or consequential nature that may be incurred through the use of this publication. This publication is not intended for persons subject to a legislation that prohibits its distribution or makes its distribution contingent upon an approval. Persons in whose possession this publication comes, as well as potential investors, must inform themselves in their home country, country of residence or country of domicile about the legal requirements and any tax consequences, foreign currency restrictions or controls and other aspects relevant to the decision to tender, acquire, hold, exchange, redeem or otherwise act in respect of such investments, obtain appropriate advice and comply with any restrictions. In line with internal guidelines, persons responsible for compiling this publication are free to buy, hold and sell the securities referred to in this publication. For any financial instruments mentioned, we will be happy to provide you with additional documents at any time and free of charge, such as a key information document pursuant to Art. 58 et seq. of the Financial Services Act, a prospectus pursuant to Art. 35 et seq. of the Financial Services Act or an equivalent foreign product information sheet, e.g. a basic information sheet pursuant to Regulation EU 1286/2014 for packaged investment products for retail investors and insurance investment products (PRIIPS KID).