Skip navigation Scroll to top
Scroll to top

LGT Navigator: ECB to lay the foundation for interest rate turnaround

June 9, 2022

This afternoon, the European Central Bank (ECB) will most likely pave the way for a first interest rate move in July and announce the end of the negative interest rate era. A strong signal from the ECB seems justified in view of the persistently high inflationary pressure. The statements by central bank president Lagarde at the press conference at 2:30pm (CET) are therefore expected with great excitement.

ECB to lay the foundation for interest rate turnaround

The ECB is expected to set the course for the interest rate turnaround today and prepare the capital markets for the first rate hike in around eleven years. Numerous votes from the central bank's top committee have already indicated several times that it is appropriate to raise interest rates in view of the record inflation in the euro area, because high inflation is increasingly weighing on the economy and especially on consumption. But even the ECB is not “omnipotent” and cannot do much, for example, about the sharp rise in energy prices.

Stock market sentiment remains fragile

Meanwhile, sentiment on the stock markets remains fragile, while yields are rising on the bond markets. The benchmark ten-year US government bond yield climbed back above the three percent mark to 3.05%. On Wall Street, the Dow Jones Industrial went out with a daily loss of -0.81% at 32'910.90 points. The S&P 500 lost a good one percent in midweek and fell back to 4'115.77 points. On the Nasdaq 100, the indices fell by about -0.75%. In addition to the interest rate decision of the ECB, tomorrow will already be the latest data on the inflation trend in the US and next week the upcoming interest rate decision of the Fed.

In Asia, the trend on the stock markets remains mixed and characterized by inflation and economic concerns. In Tokyo, the 225-stock Nikkei index trades around +0.4% higher, while in Hong Kong and in Shanghai, the indices record losses of around -0.3% to -0.5%. 

Euro economy started the new year better than anticipated

According to revised data, the eurozone's gross domestic product grew more strongly in the first quarter than previously expected. Compared to the previous quarter, the GDP of the 19-euro countries expanded by +0.6%. A previous estimate by Eurostat had still assumed +0.3%. Ireland's economy grew most strongly at +10.8%. By contrast, the “big two” Germany and France recorded only moderate growth of +0.2% in Q1 or, in the case of France, even a decline in economic output of -0.2%. 

Economic Indicators June 9

MEZ Country Indicator Last period
13:45 EZ ECB Monetary Policy Announcement
14:30 EZ ECB President Lagarde Press Conference
14:30 US Initial Jobless Claims (weekly) 200,000

 

Earnings Calender June 9

Country Company Period
GE Beiersdorf Capital Markets Day
US AMD Investor Day

 

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, 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.