Asian stock exchanges show a mixed picture on Tuesday. In Tokyo, the Nikkei trades around -0.2% weaker. In Hong Kong, the Hang Seng gains +0.5% and the Shanghai Composite climbs +0.8%. The sentiment in Chinese companies has improved in May. Accordingly, the Purchasing Managers' Index (PMI) for the industry rose from 47.4 in the previous month to 49.6 points, the statistics office announced on Tuesday in Beijing. The increase was thus somewhat stronger than expected. However, the index remains below the threshold of 50, which marks an expansion of industrial activity.
In the US, stock exchanges remained closed on Monday.
On Tuesday night, the EU countries reached a compromise in the dispute over the oil embargo against Russia. According to the agreement reached at the EU summit in Brussels, only seaborne oil and petroleum products from Russia will be sanctioned initially. The delivery via pipelines will be temporarily possible. Hungary also agrees with this proposal. The country had opposed a complete import ban, but can now continue to obtain supplies of Russian oil via the Druzhba pipeline. The decision will reduce the EU's oil imports from Russia by around 90% by the end of the year, EU Commission President Ursula von der Leyen said. The sanctions package is to be formally adopted on Wednesday.
The price of oil has risen again after the agreement at the EU summit. A barrel of Brent crude cost over USD 123 and the US benchmark West Texas Intermediate was quoted at around USD 119. Experts believe that demand for the commodity should increase again in the summer. Thus, the vacation season is starting in numerous countries, which is characterized by a sharp increase in car traffic in the US, for example. But further easing of the corona protection measures is also likely to increase energy demand. At the same time, oil-exporting countries have signaled that they do not intend to adjust production levels. OPEC+ will decide on further production targets on Thursday.
In Germany, inflation again reached a new record high in May. Prices increased by +7.9% compared to the same month last year, as reported by the Statistical Office on Monday. Thus, the annual inflation rate remains above the value of +7% for the third time in a row. Although wages also increased significantly in the first quarter, wage growth lags behind inflation. As a result, real earnings declined by -1.8% from January to March on a year-on-year basis, the statisticians calculate.
In Spain, too, price growth accelerated again in May after a temporary slowdown. Inflation climbed +8.5% year-on-year, after +8.3% in April and +9.8% in March.
Given the rapid price growth, the European Central Bank (ECB) is planning the first interest rate hike in the euro area in eleven years. Various ECB officials have stated in recent days and weeks that they plan to raise key interest rates in July.
Economic sentiment in the eurozone stabilized in May. The Economic Sentiment Indicator (ESI) rose +0.1 points from the previous month to 105.0, according to the European Commission. This, after the barometer fell significantly twice in a row. However, a look at the subcomponents shows that the mood in the industry has clouded over for the third month in a row. Main reasons are the war in Ukraine and persistent supply bottlenecks. By contrast, consumer confidence has improved, as has the situation in the services sector.
|01:50||JP||Industrial production (April, m/m)||+0.3%|
|03:30||China||Purchasing manager index (May)||47.4|
|08:30||CH||Retail sales (April, y/y)||-6.6%|
|08:45||FR||Gross domestic product (y/y)||+5.3%|
|09:00||CH||Gross domestic product (y/y)||+3.7%|
|11:00||EZ||Consumer price index (May, y/y)||+7.4%|
|15:00||US||S&P/Case-Shiller-Hauspreisindex (March, y/y)||+7.8%|
|15:45||US||Chicago PMI (May)||56.4|
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Source: LGT Bank (Switzerland) Ltd.
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