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LGT Navigator: Clouded visibility

November 30, 2021

At the beginning of the week, stock markets recovered somewhat from last Friday's slump. Investors are currently cautiously weighing the latest knowledge regarding the new coronavirus variant Omicron. However, it is still unclear whether the variant is more transmissible or deadly than the currently dominant delta variant. Visibility will likely remain clouded by the increased uncertainty for some time. Investors’ focus will also remain on the inflation, which reached new highs in Germany and Spain.

Clouded visibility

On the New York Stock Exchange, equity indices started the week recouping a small portion of the heavy losses from “Black Friday”. The Dow Jones Industrial closed +0.68% higher at 35'135.94 points and the S&P 500 rose +1.32% to 4'655.27 points. On the technology exchange, the indices posted daily gains of around +2.3%.

In Asia, however, the tide has already turned again, and most stock indices are trending in negative territory again on Tuesday after initial gains in the face of increased uncertainty in the pandemic development. In Tokyo, the Nikkei 225 index trades around -1.3% lower and in Hong Kong, the Hang Seng index loses about -2.3%. In addition to Omicron, negative survey data from the Chinese service sector also had an impact. Thus, the mood there has clouded again somewhat in November, as the official purchasing managers index showed.

Vaccine makers already working on Omicron adaptations

The vaccine manufacturer Biontech says it is already working on adapting its Covid-19 vaccine to the new Omicron variant. The Mainz-based company explained that this was being done as a preventive measure so as not to lose any time. The US biotech company Moderna has also already announced that it is working to be able to produce a vaccine specifically tailored to Omicron on a large scale early next year.

Economic sentiment in the eurozone remains gloomy

The economic sentiment barometer compiled monthly by the European Union Commission signaled a more pessimistic assessment in November. The composite index, which includes both the business climate of companies and consumer confidence, fell from 118.6 points in October to 117.5. Sentiment deteriorated above all in Germany and the Netherlands, but also in Spain.

Strong surge in inflation in Germany

Consumer prices in Germany again rose sharply in November compared with the same period of the previous year, reaching +5.2%, the highest level for around 29 years. In October, the inflation rate was still +4.5%. Many economists, including economic research institutes such as ZEW in Mannheim and the ECB, believe that the inflationary spurt has now reached its peak. The price increase is being driven primarily by energy prices. German households had to pay around +22% more for energy than a year earlier.

Inflation in Spain also rises to highest level in almost 30 years

In Spain, consumer prices rose by +5.6% year-on-year in November, up from +5.4% a month earlier. This brought the inflation rate to its highest level since September 1992.

ECB director defends central bank's current inflation outlook

According to the German ECB director Isabel Schnabel, inflation in the eurozone will have already peaked in November. In the coming year, a gradual slowdown towards the ECB's inflation target of two percent can be expected. According to Schnabel, there are no indications that inflation is getting out of control. The current supply bottlenecks should gradually ease, and energy prices should not continue to rise at the same pace, the ECB director said in an interview. Schnabel's assessment is thus roughly the same as that of ECB President Christine Lagarde. In its current 2022 forecast published in September, the ECB assumes an inflation rate of +1.7% and +1.5% in 2023.

Today at 11:00 (CET), the latest consumer price data in the euro area for November 2021 are eagerly awaited. In October, the inflation rate had amounted to +4.1%. Economists expect an increase to +4.5%.

Economic Indicators November 30

MEZ Country Indicator Last period
08:45 FR Consumer Prices (October, y/y) +3.2%
08:45 FR GDP Q3 (Revision, q/q) +3.0%
09:00 IT GDP Q3 (Revision, q/q) +2.6%
09:00 SZ KOF Economic Indicator (November) +110.7
09:00 AUT GDP Q3 (Revision, q/q) +3.3%
09:55 GE Unemployment Rate (November) 5.4%
11:00 EZ Consumer Prices (November, y/y) +4.1%
11:00 EZ Core Consumer Prices (November, y/y) +2.1%
11:00 IT Consumer Prices (Novermber, y/y) +3.2%
15:00 US S&P/Case Shiller House Prices 20-biggest cities (Sep., y/y) +19.7%
15:45 US Chicago PMI (November) +68.4
16:00 US Consumer Confidence (November) +113.8
16:00 US Fed Governor Powell Speech
16:00 US US Treasury Secretary Yellen Speech


Earnings Calender November 30

Country Company Period
FR Schneider Electric Q3
UK Easyjet Year
SWE Volvo Cars Q3


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