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LGT Navigator: Deteriorating global economic climate

August 13, 2019

The trade conflict between the USA and China, the ongoing unrest in Hong Kong and the slump on the Argentine stock exchange and the national currency peso continue to put pressure on the sentiment on capital markets worldwide and are having a significant impact on the global economic climate. This was once more confirmed by the latest survey results of the Munich-based Ifo.

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The trade conflict between the USA and China is becoming increasingly acute, with no end in sight. The dispute between the world's two largest economies is not only weighing on their domestic economies, but also on the global economic climate. The indicator for the global economic climate, calculated monthly by the Institute for Economic Research (Ifo) fell to -10.1 points from -2.4. "The intensification of the trade conflict is having a considerable impact on the global economy," the Ifo institute stated. Both the assessment of the current situation and the expectations for the coming months were clearly clouded. In the developed economies and the Asian emerging and developing countries, the economists questioned revised both their assessment of the current situation and their expectations downwards. The experts surveyed by the Ifo expect significantly weaker growth in world trade overall.

Argentine peso collapse

After Argentina's market-friendly president, Mauricio Macri did worse than expected in an important sentiment test for Sunday's presidential primary election, the national currency collapsed yesterday by more than -30 percentage points. Bonds and equities also came under pressure after opposition candidate Alberto Fernandez, who will run with former president Cristina Fernandez de Kirchner, was 15.5 percentage points ahead of Macri in the primaries. Against this backdrop, analysts are now assuming that Macri has little chance of winning a re-election for a second term in the actual presidential elections in October. Investors are more critical of Fernandez than Macri because he has spoken out in favor of political intervention in the economy in the past.

Chinese investments in Europe down significantly

The expansion of Chinese companies in Europe has become significantly weaker. According to a study by management consultants "EY", Chinese companies spent only USD 2.4bn on company acquisitions and investments in Europe in the first half of 2019. This development corresponds to a decline of 84 percentage points compared to the first half of 2018. 81 Chinese companies took over or invested in European companies. However, these were predominantly smaller deals. According to the EY study, Chinese companies invested just USD 505 million in eleven German companies. In 2018, the total was still more than ten billion. 

 

Economic Indicators August 13

MEZ Country Indicator Last
08:00 DE EU harmonized Consumer Prices (y/y) 1.1%
09:00 ES EU harmonized Consumer Prices (y/y) 0.7%
10:30 GB Unemployment ILO Rate June 3.8%
11:00 DE Economic sentiment (ZEW) -24.5
11:00 EU Economic sentiment (ZEW) -20.3
14:30 US Core Consumer Prices (y/y) 2.1%
14:30 US Consumer Prices (y/y) 1.6%

Earnings Calendar August 13

Country Corporate Period
CH Swiss Life H1
DE Henkel 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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Impressum
Herausgeber: LGT Bank (Schweiz) AG, Glärnischstrasse 36, CH-8027 Zürich
Redaktion: Alessandro Fezzi, +41 44 250 78 59, E-Mail: lgt.navigator@lgt.com
Quelle: LGT Bank (Schweiz) AG
Core Personal Consumption Expenditure
MEZCountryIndicatorLast08:00DERetail Sales (y/y)-1.7%08:45FRConsumer Prices EU Harmonized (y/y)1.4%09:00ESGDP (y/y)2.4%09:55DEUnemployment Rate5.0%11:00EUGDP (y/y)1.2%11:00EUCore Consumer Prices (y/y)1.1%11:00EUUnemployment Rate7.5%11:00ITConsumer Prices EU Harmonized (y/y)0.8%12:00ITGDP (q/q)0.12%14:15USADP Employment Report102k20:00USFederal Funds Target Rate2.5%