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LGT Navigator: Focus on European economic data

November 29, 2019

In the absence of Wall Street momentum, trading on Thanksgiving Day remained relatively quiet on European stock exchanges and investors appear to be consolidating recent gains. The latest economic data from the euro zone showed a slight improvement in economic sentiment, albeit at a low level. As the day progresses, more economic data is expected for the euro area, including GDP data, inflation figures and labor market reports.

Eurozone economy

According to the latest survey results of the EU Commission, economic sentiment in the euro zone brightened slightly in November from a low level. The Economic Sentiment Indicator (ESI) improved by 0.5 to 101.3 points. In the previous month, the sentiment barometer reported its lowest value since four and a half years. The monthly composite economic sentiment index published by the Brussels executive includes the areas of industry, construction, services, retail trade and consumer confidence. In the following European stock markets, most indices tended slightly negative due to the lack of impetus from the US. European government bonds also ended trading yesterday in a quiet environment, mostly with slight price declines. Italian bonds underperformed after the oversubscription rate for the replenishment of five- and ten-year BTPs was lower than at the October auction.

Japan's economy in distress

In Japan, industrial production slumped in October at a rate not seen since the beginning of 2018. Industrial output in the world's third-largest economy fell by -4.2% compared with the previous month – twice as much as economists had expected. The main reason is likely to be the uncertainty surrounding the ongoing trade conflict between the US and China and the resulting weakness in global demand, which is also having a severe impact on Japan's economy. In addition to this external factor, the Japanese economy is also struggling with "its own" problems. The increase in value-added tax, for example, is considerably dampening the Japanese consumer climate. This becomes obvious in retail sales, which slumped in October by around -7% year-on-year. Economists had only expected a decline of -4.4%. On 1st October, the government raised the nationwide value-added tax from eight to ten percent.

Swiss economy defies geopolitical uncertainties

According to the State Secretariat for Economic Affairs (Seco), the stronger-than-expected growth of the Swiss economy in the third quarter was primarily based on exports of chemical and pharmaceutical products. In addition, the energy sector achieved record growth thanks to favorable weather conditions. In Q3, the Swiss gross domestic product grew by +0.4% compared to the previous quarter, twice as much as economists had expected on average. Growth was also twice as strong as in the euro zone. The Swiss economy thus appears to be defying the unfavorable international environment against the backdrop of the trade conflict.



Economic Indicators November 29

MEZ Country Indicator Last
08:00 GE Retail Sales (m/m) +3.4%
08:45 FR GDP Q3 (q/q) +0.3%
08:45 FR Consumer Prices (y/y) +0.9%
09:00 SZ KOF economic indicator 94.7
09:55 GE Unemployment rate 5.0%
11:00 EZ Consumer Prices (y/y) +0.7%
11:00 EZ Unemployment rate 7.5%
11:00 IT Consumer Prices (y/y) +0.2%
12:00 IT GDP Q3 (q/q) +0.1%

Earnings Calendar November 29

Country Corporate Period



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Source: LGT Bank (Switzerland) Ltd.

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