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LGT Navigator: Economic worries keep stock markets in check

July 5, 2022

While the financial markets in the US did not trade because of the national holiday, Europe's stock exchanges started the new week with the handbrake on. Concerns about the future development of the economy and inflation, and in Europe in particular fears of an energy crisis, continue to weigh heavily on investor sentiment.

Economic worries keep stock markets in check

The EuroStoxx 50 exited the week in quiet trading at 3,452.42 points (+0.12%). Thus, the European benchmark index could at least stabilize after the loss of about -2.5% in the previous week, but new impulses were missing. Among the top stocks in the EuroStoxx 50 and Stoxx Europe 50 yesterday were oil and gas stocks, such as BP or Shell.

In Asia, the stock indices tended on Tuesday without a uniform direction. In Tokyo, the 225-stock Nikkei index trades just under +1% higher and in Hong Kong, the Hang Seng trades around +0.6% above the previous day's close. In Shanghai and Shenzhen, the indices record moderate daily losses.

Australia's central bank raises key interest rate again

The central bank of Australia tightened its monetary policy with another, third, interest rate step by 50 basis points to +1.35%, bringing the key interest rate to the highest level since May 2019. Analysts had expected another rate hike at this level.

Investors more pessimistic about the future, according to Sentix

Financial experts surveyed monthly by German financial market analysis firm Sentix were much more negative in the latest edition for July. The economic indicator, which is based on the survey results, fell from minus 15.8 to minus 26.4 points and is thus at its lowest level in a good two years. The dynamics of the deterioration in sentiment are strongly reminiscent of the financial crisis in 2008, only this time it is not the fear of a collapse of the financial system, but of a collapse of European energy supplies because of the Ukraine war, Sentix commented. In addition

ECB to give greater weight to climate protection

As part of its mandate, the European Central Bank (ECB) will take further concrete steps to incorporate climate protection into monetary policy operations, ECB President Christine Lagarde said. Accordingly, climate protection is to play a greater role in monetary policy in the future and be in line with the climate action plan in purchases of corporate bonds or disclosure requirements and risk management. In this way, Lagarde emphasized, the ECB wants to put its commitment to combating climate change into practice.

Inflation rate in Switzerland leaves 3% mark well behind

In Switzerland, consumer price inflation continued to rise in June and, at +3.4% for the year, was well above the +2.9% recorded in the previous month. The inflation rate was thus also at the upper end of expectations. The upward trend in prices was driven by the increase in the price of imported goods, which rose by +8.5% year-on-year.

Economic Indicators July 5

MEZ Country Indicator Last period
08:45 FR Industrial Production (May, m/m) -0.1%
09:15 ES PMI Services (June) 56.5
09:45 IT PMI Services (June) 53.7
09:50 FR PMI Composite (June) 52.8
09:55 GE PMI Composite (June) 51.3
10:00 EZ PMI Composite (June) 51.9
10:30 UK PMI Composite (June) 53.1


Earnings Calender July 12

Country Company Period
US Pepsico Q2


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