Skip navigation Scroll to top
Scroll to top

LGT Navigator: Interest rate hopes drive stock market recovery

June 5, 2019

After a weak start to the week, stock indices in Europe and on Wall Street began to recover, driven by hopes of a loosening of Fed interest rate policy.

Navigator_Fed

Statements by high-ranking US central bank representatives spurred interest rate lowering fantasies on the capital markets. Yesterday, US Federal Reserve Chairman Jerome Powell stressed the risks of the ongoing trade conflict between the US and China. The Fed will closely monitor developments and react accordingly if necessary. James Bullard, head of the St Louis Fed, said that interest rate cuts might be appropriate due to the increased risks to US economic growth. Currently, the probability that the Fed will loosen its key rate again at its next meeting on 19 June is estimated at just under 15%. Looking ahead to September, the markets are currently assuming a probability of over 80% in view of the economic risks.

Euro-area inflation and unemployment at lows

Inflation in the euro zone fell sharply in May and the unemployment rate is at its lowest level since 2008. Consumer prices rose by +1.2% in May compared with the same period last year, making inflation in the euro zone much more moderate than in the previous month (+1.7%). Energy prices rose again over the year as a whole (+3.8%), but food and stimulants were also more expensive than average than in the same month last year. Core inflation, excluding energy and food, fell in the reporting period from +1.3% in the previous month to +0.8%. At the same time, the unemployment rate in the euro zone fell from 7.7% to 7.6%, its lowest level for more than ten years. The lowest unemployment rates were registered in Germany and the Netherlands. Greece, Spain and Italy continue to have the highest unemployment rates. Against this backdrop, the pressure on the ECB to refrain from the targeted interest rate turnaround could also increase. On Thursday, the ECB will decide on its further monetary policy stance.

Shell with ambitious outlook

British-Dutch oil company Royal Dutch Shell (RDS) plans to pay its shareholders around USD 125bn in dividends and share buybacks between 2021 and 2025. The shareholders could expect significantly higher earnings compared to the current five-year period. At the same time, RDS raised its organic free cash flow target to USD 35bn in 2025, based on an oil price of approximately USD 60 per barrel.



Economic Indicators June 5

MEZ Country Indicator Last
09:15 SP PMI Composite 53.10
09:45 IT PMI Composite 49.50
09:50 FR PMI Composite 51.30
09:55 GE PMI Composite 52.40
10:00 EZ PMI Composite 51.60
10:30 UK PMI Composite 50.90
11:00 EZ Retail Sales (y/y) +1.9%
14:15 US ADP Employment +275'000
15:45 US PMI Composite 50.90
16:00 US ISM PMI Non-Manufacturing 55.50

Earnings Calendar June 18

Country Corporate Period
US Oracle Q4

 

 

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.

LGT Research Publications subscription 

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.

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