Consumer prices in the United States rose by +7.9% year-on-year in February, driven by sharp increases in energy prices - in February, the energy component rose by almost +26% year-on-year. The inflation rate is thus the highest it has been in 40 years. The core rate, i.e. excluding energy and food prices, was +6.4%. The interest rate turnaround in the US can thus no longer be stopped, and the Fed will raise its key rate by at least 25 basis points next Wednesday, March 16, for the first time since the corona pandemic.
As in Europe – the EuroStoxx 50 closed -3% lower at 3'651.39 points – stock prices on Wall Street fell again on Thursday. However, the Dow Jones Industrial went out with a relatively small daily loss of -0.34% at 33'174.07 points. On the one hand, the further rising inflationary pressure in the US caused concern and on the other hand, the summit meeting between Russia and Ukraine brought no rapprochement. The S&P 500 closed -0.43% lower at 4'259.52 points and on the technology exchange Nasdaq indices fell by a good -1%. In the center of interest now moves the monetary policy decision of the Federal Reserve next week. The yield of ten-year US government bonds climbed meanwhile to just under 2%.
In Asia, the stock indices followed the negative guidance from overseas and tended to close the week in negative territory. In Tokyo and Hong Kong, the indices lose about -2%.
As expected, the European Central Bank (ECB) left key interest rates unchanged at a record low. On the other hand, however, the volume of the APP bond purchase program is now to be reduced as early as the end of June, which would put an end to purchases altogether in the third quarter of this year. This means that the ECB's monetary policy will become slightly more restrictive in view of the persistently high inflationary pressure – the inflation rate in the euro area is currently +5.8% – and despite the risks arising from the Ukraine war. ECB President Christine Lagarde expects “significant effects on economic growth and inflation” because of the war in Ukraine. The economy will be dampened by the sharp rise in commodity and energy prices, she said. At least the easing of the pandemic and an easing of supply bottlenecks should provide some support.
Against the background of the war in Ukraine, the economic outlook for the eurozone has clouded over. As a result, the ECB reduced its GDP forecast for the current year to +3.7% from +4.2% (in December). For 2023, the ECB now assumes +2.8% instead of +2.9%, and in 2024 the forecast is unchanged at +1.6%. At the same time, given higher energy prices, inflation in the eurozone is now expected to reach +5.1% in the current year. This is a massive shift from the December forecast of +3.2%. Next year, inflation is expected to fall to +2.1% (previously +1.8%).
The first direct talks between Russian Foreign Minister Sergei Lavrov and his Ukrainian counterpart Dmytro Kuleba in Turkey ended yesterday without any presentable results, disappointing hopes for an early end to the war. The Kremlin is said to continue to insist that Ukraine declare itself neutral in its constitution and recognize the annexed Black Sea peninsula of Crimea as Russian and the separatist regions of Luhansk and Donetsk as independent states. Lavrov, meanwhile, accused the West of exacerbating the conflict by supplying weapons to Ukraine. At least, he said, direct talks were to be continued in principle.
US President Joe Biden is considering to withdraw Russia's so-called “preferred trade status”. That would put US trade relations with Russia in the same category as Cuba or North Korea. Biden addresses the US Congress today at 4:15 p.m. CET. Meanwhile, in Brussels, EU leaders are discussing the way forward in the Ukraine crisis. A ban on imports of oil, gas and coal from Russia seems to be gaining more and more support.
|08:00||UK||Industrial Production (January, m/m)||+0.3%|
|08:00||GE||Consumer Prices (February, y/y)||+5.1%|
|09:00||ESP||Consumer Prices (February, y/y)||+6.2%|
|16:00||US||Consumer Sentiment (March)||61.8|
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, E-Mail: email@example.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.