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LGT Navigator: Inflation worries once again put the breaks on stock markets

November 9, 2021

On Wall Street, investors shifted down a gear at the start of the week and appear to be consolidating the recent record rally for the time being. A look at the European and Asian stock markets also suggests that the last positive impulses, such as the US infrastructure package, are giving way to concerns about the economy and inflation. Thus, the latest data on the inflation trend in the US are in the foreground today.

Inflation worries put the breaks on stock markets

The Dow Jones Industrial initially recorded another record high on Monday and closed +0.29% higher than on Friday at 36'432.22 points. The broad S&P 500, however, remained virtually unchanged at 4'701.70 points (+0.09%) and on the Nasdaq, the indices could not increase after the recent record chase yesterday. Today in the US, the data on producer prices are now in focus, followed by consumer price data on Wednesday.

On the corporate side, especially in Europe, some important quarterly results are due, for example, from Bayer or BioNTech. The shares of Tesla were also in focus yesterday. CEO Elon Musk let vote via Twitter whether he should sell a tenth of his Tesla shares. The package would be worth around USD 21 billion. Tesla shares had reached a record high of USD 1'243 last week.

Economic sentiment in the eurozone catches up

According to the latest survey results of the German financial market analysis company Sentix, the assessment of the further development of the German economy was more optimistic again in November after three consecutive declines. The corresponding economic indicator improved more strongly than expected by 1.4 points to plus 18.3 points (consensus +15.0). According to Sentix, the first increase since July indicates that the economic slowdown is slowly coming to an end and that investors only expect a temporary burden from interrupted supply chains.

ECB chief economist reiterates inflation outlook

Philip Lane, chief economist of the European Central Bank (ECB), emphasized in an interview that the ECB still expects the currently high inflation to decline again next year. The current situation is very different from that in the 1970s and 1980s, Lane said. The background to this is that the global recovery from the corona slump has been faster than expected, which is why there have been shortages. But this should be largely resolved next year, the ECB chief economist commented. Against this background, he said, loose monetary policy remains necessary. This is particularly the case as euro countries have a limited ability to pursue growth-friendly fiscal policies due to high overall sovereign debt levels and the lack of a permanent central fiscal capacity.

“Key points” point to only weak final declaration at UN climate summit

According to initial assessments, the first key points published at the beginning of the week by the UN Framework Convention on Climate Change for the final declaration of the world climate summit in Glasgow, Scotland, appear to be rather vague. For example, targets for phasing out the internal combustion engine are not included, and the provision of aid money for countries particularly affected by climate change is non-binding. The 200 or so countries still have until the end of this week to agree on a final declaration, and expectations are very high in view of the urgency.

Economic Indicators November 9

MEZ Country Indicator Last period
08:00 GE Exports (September, m/m) -1.2%
08:00 GE Imports (September, m/m) +3.5%
11:00 GE ZEW Economic Perspectives (November) +22.3
11:00 EZ ZEW Economic Perspectives (November) +21.0
14:00 EZ ECB President Lagarde Speech
14:30 USA Producer Prices (October, m/m) +0.5%
14:30 USA Producer Prices (October, y/y) +8.6%
15:00 USA Fed Governor Powell Speech
17:00 UK BoE Governor Bailey Speech


Earnings Calender November 9

Country Company Period
SZ Swiss Life Q3 Sales
SZ Alcon Q3
GE Bayer Q3
GE BioNTech Q3
GE Porsche Q3
AUT  Wienerberger Q3
USA Alcoa Q3


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Source: LGT Bank (Switzerland) Ltd.

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