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LGT Navigator: New virus variant causes uncertainty

November 26, 2021

Stock markets in Europe, in the absence of the US stock exchanges, which were closed yesterday for Thanksgiving, ended the series of losses of recent days and posted gains of about half a percent. Concerns about the further development of the pandemic, particularly due to a newly discovered coronavirus variant from Africa, have gripped stock markets in Asia today and are also likely to have a negative impact on Europe's stock markets. Stock market participants expect a positive impulse from today's “Black Friday,” which should provide a welcome infusion to consumption.

New virus variant causes uncertainty

In Tokyo, the 225-stock Nikkei index loses this morning around -2.5% and in Hong Kong, the Hang Seng index is also more than -2% in the red. Also share indices in other locations in Asia register partly strong daily losses. Background is the message of a new variant of the Coronavirus variant B.1.1.529 in southern Africa, which could be highly contagious and the vaccination protection more easily penetrates above all because of unusually many mutations. On Europe's stock exchanges, this is likely to weigh on prices at the end of the week. This after the European benchmark index EuroStoxx 50 has closed on Thursday still +0.40% higher at 4'293.24 points.

Meanwhile, the EU Commission has recommended the EU countries not to introduce additional travel restrictions for vaccinated, recovered or freshly tested. Those with a valid EU corona certificate should “in principle not be subject to additional restrictions such as testing or quarantine,” Brussels said.

ECB Minutes: Upside risks to inflation have increased

The top body of the European Central Bank (ECB) has already discussed in detail the increasing upside risks to inflation on the monetary policy decision on October 28. This emerges from the minutes of the meeting published yesterday. The ECB acknowledges that the upside risks to inflation have increased. While an overreaction is to be avoided, so is “unwarranted inaction.” Consequently, “ the ECB needs to retain sufficient room for maneuver in calibrating monetary policy measures to address all possible inflation scenarios.”

German economic growth slows more than expected in Q3

The German economy expanded +1.7% quarter-on-quarter in the third quarter, slightly slower than the +1.8% growth rate previously estimated. Following the easing of pandemic-related measures, the main contributor was consumer spending, which increased strongly by +6.2% quarter-on-quarter. On the other hand, exports, and business investment (-3.7%) made a negative contribution. In view of the renewed worsening of the pandemic situation in Europe, a further slowdown is expected in the coming months. This was also reflected in the Ifo Institute's business climate indicators published on Wednesday.

Dampened consumer climate in Germany in view of fourth Corona wave and inflation fears

According to the monthly survey of the Nuremberg-based consumer research company GfK, the mood of German consumers has deteriorated with a view to December. Against the backdrop of rising infection figures and hefty price increases, the GfK consumer climate barometer fell from plus 1.0 points in November to minus 1.6 points – the lowest value in six months. There was a significant drop in the propensity to buy among the consumers surveyed, as well as in expectations regarding income development.

Inflationary pressure in Spain constantly increasing

In Spain, upward price pressure is accentuating at producer level. In October, producer prices rose by almost +32% over the full year, the highest rate of increase since records began in 1976, according to the INE statistics office in Madrid. Spanish companies had to pay almost +90% more for energy.

Economic Indicators November 26

MEZ Country Indicator Last period
00:00 US Exchanges close early due to Thanksgiving Holiday
08:00 GE Import Prices (October, y/y) +19.6%
08:45 FR Consumer Confidence (November) +99.0
09:00 SZ GDP Q3 (q/q) +1.8%
09:00 EZ ECB President Lagarde Speach
10:00 IT Business Climate (November) 114.9
10:00 IT Consumer Sentiment (November) 118.4


Earnings Calender November 30

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


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Source: LGT Bank (Switzerland) Ltd.

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