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LGT Navigator: Political wrangling in Washington becomes a burden

September 30, 2021

Prices on equity markets recovered midweek after rising interest rates had caused caution. Consumer goods and utilities shares were in particular demand. The focus is now increasingly on the threat of a shutdown in the United States if Democrats and Republicans fail to reach a last-minute agreement on transitional funding. In addition, a vote is expected today in the House of Representatives on the hard fought infrastructure package introduced by US President Joe Biden.

Political wrangling in Washington becomes a burden

In New York, the Dow Jones Industrial closed +0.26% higher at 34'390.72 points, after the leading index had slumped by about -1.6% on Tuesday. The S&P 500 gained +0.15% to 4'359.46 points. On the Nasdaq, however, the indices could not recover noticeably from the almost -3% slump the day before. Asia today showed a mixed picture on the stock exchanges. The mood was clouded by new economic data from China. The official purchasing managers' index for China's manufacturing sector weakened from 50.1 points in August to 49.6 in September, signaling a contraction for the first time since February 2020.

Japan's next Prime Minister

Former Foreign Minister Fumio Kishida, 64, is set to become Japan's new head of government, succeeding Yoshihide Suga, who resigned after just one year in the face of poor poll ratings, particularly on pandemic control. Kishida is considered a moderate conservative. In geopolitical terms, he is likely to reaffirm the strategic partnership with the United States. In terms of economic policy, Kishida speaks of a “new capitalism” that should reduce the income gap between rich and poor. The new head of government also wants to promote clean energy technologies but is also in favor of nuclear energy.

More optimistic economic sentiment in the euro countries

After the EU Commission's sentiment barometer for the eurozone peaked for the time being in the summer, companies and consumers were more optimistic again in September. The Economic Sentiment Indicator (ESI) improved by 0.2 points compared with the previous month to 117.8 points, while analysts had expected a further decline to 117.0 points. However, developments differed in the various sectors of the economy. For example, sentiment improved in the industrial and consumer sectors, while the service and retail sectors expressed more pessimistic sentiment. At regional level, economic sentiment brightened in Germany, Spain, and the Netherlands, but clouded over in France and Italy.

Inflationary pressure in Spain continues to increase

The cost of living in Spain increased again in September. Over the year, consumer prices rose by +4.0%, reaching their highest level in around 13 years and significantly exceeding analysts' expectations (consensus +3.6%). As recently as August, the annual inflation rate was +3.3%.

WHO Covid-19 vaccination target missed by a wide margin

The World Health Organization's (WHO) target of having at least ten percent of the population vaccinated against the coronavirus in every country by the end of September was clearly missed, according to the organization. In Africa in particular, the vaccination rate is significantly lower. In addition to a lack of vaccine, capacity problems are also responsible for the low vaccination rates in many countries. The WHO criticizes above all the fact that rich countries hoard vaccine doses, mostly for the foreseeable booster vaccination. Meanwhile, millions of people worldwide would urgently wait for a first vaccination. So far, rich countries have promised to donate more than one billion vaccine doses, but have delivered less than one-fifth of them.


Economic Indicators September 30

MEZ Country Indicator Last period
08:00 GE Import Prices (August, m/m) +2.2%
08:45 FR Consumer Prices (September, y/y) +2.4%
08:45 FR Consumer Spedning (Augsut, y/y) -2.2%
09:00 SZ KOF Economic Indicator (September) 13.5
09:55 GE Unemployment Rate (September) 5.5%
11:00 IT Consumer Prices (September, y/y) +2.5%
11:00 EZ Unemployment Rate (August) 7.6%
14:00 GE Consumer Prices (September, y/y) +3.4%
14:30 US GDP Q2 (Revision, q/q)
14:30 US Initial Jobless Claims (weekly) 351,000
15:45 US Chicago PMI (September) 66.8
16:00 US Fed Governor Powell & Treasury Yellen Testamony 


Earnings Calender September 30

Country Company Period
SZ Novartis ESG Investor Day


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