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LGT Navigator: Investors stay under cover ahead of Fed's next rate hike

September 19, 2022

The sentiment on capital markets remains tense ahead of the anticipated next interest rate hike by the Federal Reserve. In addition, stubbornly high inflation and subsequently rising interest rates are intensifying concerns about the economy. The US courier and logistics company FedEx delivered a negative signal in this regard with a profit warning due to significantly worsened prospects for the global economy. Due to its business, FedEx is considered a barometer (bellwether) of future global economic development. 

Investors stay under cover ahead of Fed's next rate hike

On the New York Stock Exchange, the downward trend continued at the end of last week. The Dow Jones Industrial closed -0.45% lower at 30,822.42 points, resulting in a loss of -4.1% for the week. The S&P 500 declined -0.72% to 3,873.33 points on Friday. On the Nasdaq, the indices lost about -0.5%. In addition to the expected further monetary tightening of the Federal Reserve, a profit warning from FedEx also increased the economic concerns of investors. Due to its important role in global supply chains, the American parcel delivery service and logistics group is regarded as a barometer for the world economy. As a result, the share price slumped by more than -20%. On the bond market, the yield on ten-year US government bonds briefly reached its highest level in around three months at 3.48% on Friday and is now trading at 3.45%.

The majority of stocks in the Asia-Pacific region fell on Monday ahead of the Fed interest rate decision. In Hong Kong, the Hang Seng Index fell by about -1% and the Hang Seng Tech Index fell by about -2%. The South Korean Kospi lost about -1.2%. In mainland China, the Shanghai Composite lost about -0.2% and the Shenzhen Component slipped about -0.25%. Meanwhile, China's central bank lowered its 14-day reverse repo rate. MSCI's broadest index of Asia-Pacific stocks outside Japan fell about -0.5%. In Tokyo, the stock exchanges remained closed for a holiday.

Porsche to go public on September 29

According to a resolution of the Board of Management and Supervisory Board of the Volkswagen Group, Porsche is to go public on September 29. From then on, the Volkswagen subsidiary will likely have some of its preferred shares freely traded on the financial market. The sports car manufacturer is expected to have a market capitalization of EUR 70 to 75 billion. The subscription period is expected to start on September 20 and run until September 28.

Inflation in the eurozone remains at record levels

Inflation in the euro countries accelerated further in August at a high level. At +9.1%, the inflation rate also reached a new record level. In the previous month, consumer prices had risen by +8.9% year-on-year. The main driver remains energy prices, which have risen by almost +39% over the year. However, food prices also increased sharply, rising by +10.6% year-on-year. Excluding energy and food prices, the core rate was +4.3% (previous month +4.0%).

Italy's inflation rate continues to rise

In Italy, the cost of living increased more than expected in August, with the annual inflation rate climbing to +9.1% from +9.0% in July, according to the Istat statistics office in Rome. Compared with the previous month, consumer prices rose by +0.9%, driven by higher energy and food prices. 

Economic Indicators September 19

MEZ Country Indicator Last period
06:00 JP Holiday
06:00 UK Holiday
16:00 US NAHB Immobilienmarktindex (September)  +49


Earnings Calender September 19

Country Company Period
SZ Emmi Capital Market Day


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