On the New York Stock Exchange, the recovery continued at the beginning of the week. The Dow Jones Industrial gained +0.71%, closing at 32'381.34, and thus recorded the fourth winning day in a row. The S&P 500 closed at 4,110.41 points, +1.06% firmer. On the Nasdaq technology exchange, the indices rose by about +1.2%. Support came mainly from price gains at Apple. Figures on pre-orders for the new iPhone 14 let the stock rise by almost +4%. Meanwhile, the yield of ten-year US government bonds held at 3.35%.
Whether the upward trend on Wall Street will continue, however, is questionable. Thus, equity analysts have reduced their forecasts for the third quarter significantly and lowered the earnings estimates for the S&P 500 companies since the end of June by 5.5 percentage points, according to data service provider FactSet. Corporations are also more skeptical about the future. In fact, 240 of the 500 S&P companies mentioned a recession in their second-quarter earnings conference calls – the most since data collection began in 2010. Despite the recent rally, the S&P 500 is down about -15% year-to-date. The Dow Jones is trading about -12% weaker than at the start of the year.
Asia-Pacific stock markets traded higher on Tuesday. In Tokyo, the Nikkei 225 traded around +0.2% higher. South Korea's Kospi rose about +2.6% as trading resumed after Monday's holiday, led by Samsung Electronics, which gained +4.5%. In mainland China, the Shanghai Composite trades about +0.3% higher and in Hong Kong, the Hang Seng Index gains about +0.4%. The broadest MSCI index for Asia-Pacific equities outside Japan is up about +0.7%.
The Ifo Institute expects prices in Germany to continue to rise and economic output to contract. For this year, the Munich-based economists forecast an inflation rate of +8.1%, followed by +9.3% next year. The German economy should grow by +1.6% in 2022 before contracting by -0.3% in 2023, the Ifo economic forecast says. “We are heading into a winter recession,” said Timo Wollmershäuser, head of Ifo economic research. The trigger for the difficult economic situation is the energy crisis. For example, the Munich-based institute expects electricity and gas prices to rise sharply in early 2023, fueling inflation in Germany once again. This is likely to reduce purchasing power, which will not be cushioned even by the relief packages that have been agreed. “The loss of purchasing power, measured by the decline in real per capita wages, is higher than at any time since the start of today's national accounts in 1970,” Wollmershäuser explained. However, the Ifo Institute does not expect any serious impact on the labor market. The economic situation in Germany is not expected to normalize until 2024. The economists forecast growth of +1.8% and inflation of +2.5%.
The British economy performed less well than expected in the past quarter. Thus, growth from May to July stagnated compared to the previous quarter, after a plus of +0.3% in the first quarter, the statistics office announced on Monday. Analysts had expected an expansion of +0.1% in the second quarter. The UK economy has been losing momentum since the beginning of the year as rapidly rising prices weigh on consumers and businesses. As a result, annual inflation reached its highest level in forty years in July (+10.1%). New Prime Minister Liz Truss announced last week that household energy costs will be capped at an average of GBP 2500 per year over the next two years. However, economists are divided on whether this will be enough to ease the burden on people. Because at the same time, it is considered certain that the Bank of England (BoE) will tighten interest rates again next week. The financial markets expect the BoE to raise the key interest rate by a further 75 basis points from its current level of 1.75% – this would be the seventh interest rate hike in a row.
|08:00||GE||Consumer price index (August, y/y)||+7.9%|
|08:00||CH||Producer price index (August, y/y)||+5.7%|
|11:30||EZ||ZEW economic sentiment (September)||-54.9|
|14:30||US||Consumer price index (August, y/y)||+8.5%|
|US||extraorord general meeting|
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, E-Mail: email@example.com
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).