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LGT Navigator: Waiting for the things to come

August 25, 2021

Shortly before the international Jackson Hole central bankers' symposium, which is being held online as in the previous year due to the corona pandemic, the capital markets are eagerly awaiting the appearance of Federal Reserve Chairman Powell on Friday, as any sign regarding the timing and pace of the Fed's withdrawal of stimulus is of key importance to the markets. Against the backdrop of increasing uncertainties over the coronavirus delta variant and indications of an accompanying slowdown in the global economic recovery also because of ongoing supply chain bottlenecks, the Fed's timing of the expected monetary policy turnaround is difficult to gauge.

Waiting for the things to come

The wait-and-see attitude of investors ahead of the Jackson Hole symposium and Fed President Jerome Powell's speech is keeping stock markets around the world on the fence. The Dow Jones Industrial closed virtually unchanged from the previous day at 35,366.26 points (+0.09%). The market-wide S&P 500 and on the technology exchange Nasdaq were again reached new records during Tuesday. At the close of trading, the S&P 500 went out at 4,486.23 points (+0.15%) and the Nasdaq 100 at 15,357.68 points (+0.29%).

Also, in most stock markets in Asia dominated the mid-week cautious attitude of investors. In addition, the recovery of Chinese technology stocks stalled and concerns about the resilience of the economic recovery to the fast-spreading delta variant prevailed.

Probability of sooner Fed tapering has increased according to Goldman Sachs

The investment bank Goldman Sachs sees the probability that the Federal Reserve reducing its bond purchases (tapering) by an expected USD 15 billion per month as early as November now at a probability of 45%, instead of 25% as previously. In turn, the New York investment house lowered the corresponding probability of a December start from 55% to 35%.

German economy grows slightly stronger in second quarter

The gross domestic product of Europe's largest economy grew by +1.6% in the period from April to June compared with the previous quarter and thus somewhat more strongly than initially assumed at +1.5%. Compared with the previous year, the growth rate was +9.4% (first estimate +9.2%). Growth was also supported by renewed strength in private consumption (+3.2% quarter-on-quarter in Q2), which benefited from the easing of the corona measures.

 

Economic Indicators August 25

MEZ Country Indicator Last period
10:00 GE Ifo Business Climate Index  100.8
14:30 US Durable Goods Orders (July, m/m) +0.9%

 

Earnings Calender August 26

Country Company Period
SZ Kudelski H1
SZ Baloise H1
GE Stada H1
FR Bouygues H1
US Dell Q2
US Hewlett-Packard Q3
US Gap Q2
US Abercombie Fitch Q2

 

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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.

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