The prospect of a continued expansionary monetary policy by the ECB supported the recovery on most European stock exchanges yesterday. The EuroStoxx 50 closed +0.8% higher at 4'059.05 points. The leading index for the eurozone gained more than three percent in the last three days, thus making the short-lived slump from the beginning of the week forgotten.
On Wall Street, the positive trend continued, although the momentum was lost somewhat, especially in the standard stocks. The Dow Jones Industrial managed at the end just a narrow daily plus of +0.07% and closed at 34'823.35 points. The broad S&P 500 also struggled and closed +0.2% higher at 4'367.48 points. A mood dampener was to be found in the worse-than-expected US labor market data. Thus, the initial claims for unemployment benefits rose by 51'000 applications last week, contrary to expectations of a decline. More momentum was shown by the technology exchange Nasdaq. Price gains by Facebook (+4.8%), Microsoft (+2.4%) or Amazon (+1.9%) drove the Nasdaq 100 by +0.66% to 14'940.17 points and thus back within reach of the record high.
While in Tokyo the stock exchange will be closed again today for a holiday, most stock indices in Asia trended slightly negative at the end of the week. Dominant continues to be the concern about the spread of the coronavirus delta variant in the often only sparsely vaccinated most populous continent. In China, the Shanghai Composite trades around -0.8% in the minus and the CSI 300 loses even -1.3% and in Hong Kong, the Hang Seng Index gives up about -1.1%.
The President of the European Central Bank (ECB), Christine Lagarde, made it clear that an initial rate hike is still a long way off. According to Lagarde, key interest rates will remain at the current level or lower until inflation stabilizes at 2% in the medium term. The inflation target is to be reached “well before the end, or at around the middle, of the projection period.” This means that under the new strategy – which promises more flexibility in achieving the inflation target – the ECB would have to forecast annual average inflation of 2% in the middle of the new projection horizon. The ECB last held out the prospect of an inflation rate of 1.5% and 1.4% for 2022 and 2023, respectively, in June. The central bank will then present its new projections in September. As the adjusted forward guidance explicitly implies that the inflation target can be exceeded, there is still the possibility that the ECB could even cut key rates further.
After the leading G7 economic nations promised more climate protection at the top-level meeting in the UK in June, the focus is now on the G20 Environment Ministers' Meeting in Naples, which started yesterday. The meeting is in preparation for the G20 leaders' summit in Rome at the end of October. According to statements by US Climate Change Representative John Kerry, the path taken by the G7 countries in environmental and climate policy is to be continued in the G20 round. However, differences on climate policy are to be expected, Kerry warned.
|08:00||UK||Retail Sales (June, m/m)||-1.4%|
|09:15||FR||IHS Markit PMI Composite (July)||59.0|
|09:30||GE||IHS Markit PMI Composite (July)||60.1|
|10:00||EZ||IHS Markit PMI Composite (July)||59.5|
|10:30||UK||IHS Markit PMI Composite (July)||62.2|
|12:30||RUS||Bank of Russia Monetary Policy Decision|
|15:45||US||IHS Markit PMI Composite (July)||63.7|
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