Skip navigation Scroll to top
Scroll to top

LGT Navigator: Signs of de-escalation

January 8, 2020

Investors are currently hoping that the conflict between the US and Iran will not escalate further. US President Trump has adopted a more moderate tone for the time being and has not followed up the missile attack on two US bases in Iraq with a military response. In addition to geopolitics, new data from the US labor market were also the focus of attention in the middle of the week. For example, job growth in the private sector was much stronger than expected at the end of 2019, which is a positive sign for the official labor market report due at the end of the week.

US President Donald Trump US Iran Conflict

Thanks to hopes of an easing of the conflict in the Middle East, Asian equity markets today began to recover further. Investors seem relieved that the US government has refrained from military retaliation after the Iranian missile attacks in Iraq and that no further escalation signals were recorded from Tehran. However, US President Trump announced new sanctions and reiterated the demand that Iran abandons all nuclear ambitions and stop its support for terrorism. As a result, the broad S&P 500 and the technology-heavy Nasdaq 100 reached new record levels. On the Tokyo Stock Exchange, the Nikkei Index subsequently rose by more than +2%. The oil price had dropped by more than -4% on Wednesday with the prospect of an easing of the conflict, and gold is now trading more than -3% below yesterday's high. For European stock markets, the futures signal a friendly start.

US labor market sends signals of strength

According to the labor market services company ADP, the private sector in the US created significantly more jobs in December than analysts had expected. According to the report, 202,000 new jobs were created in the private sector in December. An increase of approximately 160,000 new jobs had been expected. In addition, the previous month's figure was revised sharply upwards from the original 67,000 to 124,000 jobs. On Friday, the US government's monthly official employment report for December is eagerly awaited, and this report may also have a direct influence on the direction of the Fed's monetary policy. A sustainably strong labor market could force the Fed to refrain from further interest rate cuts – a popular demand by US President Trump.

Slight improvement in economic sentiment in the euro area

Sentiment in the euro zone economy brightened in December for the second month in a row. The indicator calculated monthly by the EU Commission increased by 0.3 points to the 101.5 mark. The brighter sentiment was primarily driven by a more positive assessment of the service sector. In contrast, consumer confidence deteriorated. At the regional level, sentiment brightened particularly strongly in Italy and Spain. At the same time, the indicator for the business climate of the companies surveyed clouded over and is now at its lowest level in six and a half years.

Weak phase in German industry continues

German industrial companies recorded -1.3% fewer orders in November than in the previous month. In a year-on-year comparison, orders even declined by -6.5%. Already in October, order intake for the year as a whole was down -5.6%. The main reason for the disappointing development in November was a setback in large orders. From a regional perspective, it was observed that orders from abroad had fallen sharply by around -3% in November.

British push for short transition period after Brexit

British Prime Minister Boris Johnson expressed himself positively after talks with EU Commission President Ursula von der Leyen about the transition period after the Brexit. Johnson had made it clear that the transitional phase after the EU withdrawal planned for 31 January should not last longer than eleven months. Von der Leyen said that time was extremely short and priorities had to be set to deal with issues such as education, transport, fisheries and much more.

 

 

Economic Indicators January 9

MEZ Country Indicator Last
08:00 GE Exports (m/m) +1.5%
08:00 GE Imports (m/m) +0.5%
08:00 GE Industrial Production (y/y) -5.3%
11:00 EZ Unemployment Rate 7.5%

Earnings Calendar January 9, 2020

Country Corporate Period
US Duke Energy Q4

 

 

LGT helps you make informed investment decisions

All about global economic and market trends at a glance

Subscribe to LGT's research newsletters

Follow us on TwitterFacebook or LinkedIn, where we inform you about latest market developments and LGT News. Further informationen is available on: LGT Social Media.

Imprint
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, +41 44 250 78 59, E-Mail: lgt.navigator@lgt.com
Source: LGT Bank (Switzerland) Ltd.

Risk Disclosure (Disclaimer)
This publication is an advertising material / marketing communication. This publication is for your information only and is not intended as an offer, solicitation of an offer, or public advertisement to buy or sell any investment or other specific product. Its content has been prepared by our staff and is based on sources of information we consider to be reliable. However, we cannot provide any confirmation or guarantee as to its being correct, complete and up to date. The circumstances and principles to which the information contained in this publication relates may change at any time. Information that has been published should therefore not be understood as implying that no change has taken place since its publication or that it is still up to date. The information in this publication does not constitute an aid for decision-making in relation to financial, legal, tax-related or other consulting matters, nor should any investment decisions or other decisions be made on the basis of this information alone. It is recommended that advice be obtained from a qualified expert. Investors should be aware that the value of investments can fall as well as rise. Positive performance in the past is therefore no guarantee of positive performance in the future. Investments in foreign currencies are also subject to fluctuations in exchange rates. We disclaim all liability for any loss or damage of any kind, whether direct, indirect or consequential, which may be incurred through the use of this publication. This publication is not intended for persons subject to legislation that prohibits its distribution or makes its distribution contingent upon an approval. Any person coming into possession of this publication shall therefore be obliged to find out about any restrictions that may apply and to comply with them. In line with internal guidelines, persons responsible for compiling this report are free to buy hold and sell the securities referred to in this report.