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LGT Navigator: Anticipated central bank action supports market sentiment

September 10, 2019

On most stock markets, the weekly start remained relatively uninspired and investors appear to be focusing on the ECB's monetary policy decision on Thursday. The prospect of support from the central banks and the vague hope for a soon-to-be-reached settlement in the American-Chinese trade dispute are currently creating a cautiously optimistic market environment.

On capital markets, a majority of participants expect the European Central Bank (ECB) to lower its key interest rate on Thursday. In view of the global economic outlook, clouded by the trade war and the anticipated further rate cut by the US Federal Reserve (Fed), the hope of a monetary easing by the ECB seems justified. Meanwhile, US President Donald Trump commented that the United States will hold talks with China next week. US Treasury Secretary Steven Mnuchin spoke of "much progress" in the negotiations. In Italy, Prime Minister Giuseppe Conte will have to face a second vote of confidence in the Senate today. Late Monday evening, Conte won the first vote in the Chamber of Deputies after promising close cooperation with Brussels in drawing up a budget for 2020.

Brexit – Boris Johnson fails again

British Prime Minister Boris Johnson has failed for the second time with his motion for new elections. The head of government missed the necessary two-thirds majority in the lower house of parliament with 293 out of 650 votes. This means that the option to hold new elections before the planned Brexit elections on 31 October is lost. Even before the parliament took the compulsory break imposed by Johnson, the members of parliament passed a law against an unregulated EU resignation. This law stipulates that Johnson must apply in Brussels for an extension of the Brexit deadline, which expires on 31 October, if no withdrawal agreement is ratified by 19 October. MEPs will not meet again until 14 October, when Queen Elizabeth II reopens Parliament by reading the government's program. On 15 October, the remaining 27 EU countries will discuss the Brexit at ministerial level in Brussels. An EU summit of heads of state and government will then take place on 17 and 18 October. On 31 October, Great Britain would then actually lose EU membership and complete the Brexit.

Economic outlook for Europe remains bleak according to Sentix

Investors surveyed monthly by the German financial market analysis company Sentix are continuing to be pessimistic about the economic outlook for Germany and the euro zone. Although the investor confidence index for Germany calculated for September improved slightly from -13.7 in the previous month to -12.8 points – mainly thanks to slightly more optimistic expectations – the index remains at a low level. The indicator for the current economic situation is even at its lowest level since March 2010. According to Sentix, it is solely due to vague hopes of a solution to the trade dispute that expectations have improved somewhat. The economic situation remains tense. The economic barometer for the euro area rose to -11.1 points (previous month -13.7), with the expectation index rising to -12.8 (-20.0) points and the current situation index reaching its lowest level since January 2015 at -9.5 (-7.3) points. Sentix commented that the euro zone is thus remaining close to a recession. Around 900 investors, including 240 institutional investors, took part in the current survey.

AT&T shares in focus

The activist investor Elliott Management, led by billionaire Paul Elliott Singer, calls on the AT&T telecoms group to sell non-core assets, triggering a jump of more than +5% in the share price, which at times reached its highest level for almost two years. Elliott manages AT&T shares worth USD 3.2bn through funds. Sales and other measures could raise the value of AT&T shares to over USD 60bn by 2021, Elliott argued.

Economic Indicators September 10

MEZ Country Indicator Last
03:30 CN Consumer Prices (y/y) +2.8%
03:30 CN Producer Prices (y/y) -0.3%
08:45 FR Industrial Production (y/y) 0.0%
10:00 IT Industrial Production (y/y) -1.2%
10:30 GB Unemployment Rate 3.9%

Earnings Calendar September 12

Country Corporate Period
SZ KABA Holding Y
US Kroger Q2

 

 

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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%