The ECB should have had the normalization of its monetary policy on the plan. However, the war in Ukraine and the associated geo- and energy-related uncertainties could now thwart this plan. In view of the risk of stagflation, it is unlikely that key rates will be raised any time soon. Rather, ECB chief Lagarde, who has propagated a dovish monetary policy anyway, could continue to adopt a wait-and-see attitude. The challenge for central banks, and the ECB, will be not to lose their credibility when it comes to fighting inflation. In this respect, the capital markets will be eagerly awaiting the press conference (14:30 CET) and the ECB's medium-term inflation forecasts.
Europe's stock markets launched an impressive rally in midweek thanks to hopes of a cautious rapprochement between Russia and Ukraine. The EuroStoxx 50 gained almost +7.5% to 3'766.02 points, making up a good part of the previous losses. In New York, the stock indices also recovered. The Dow Jones Industrial closed +2.0% higher at 33'286.25 points and the S&P 500 gained +2.57% to 4'277.88 points. On the Nasdaq, the indices posted an even stronger increase of around +3.5%. The recovery also continued Asia's stock markets. In Tokyo, the 225-stock Nikkei index traded almost +4% higher compared to the previous day.
A background to the relief rally is certainly the decline in oil prices after the recent high. The price of the US variety WTI by more than -11%. At the same time, the yield of ten-year US government bonds climbed to 1.94%. The gold price fell on Wednesday again below the mark of USD 2'000. On Tuesday, the yellow metal reached the highest level since August 2020 at USD 2'070.
However, how long the easing on capital markets will last is extremely questionable because the consequences of rising energy and commodity prices for global economic growth, the inflation outlook and the monetary policy of the major central banks could intensify.
Today, Russian Foreign Minister Sergei Lavrov and Ukrainian counterpart Dmytro Kuleba are scheduled to meet for talks in Turkey. According to media reports, Ukraine may already be negotiating a neutrality status. In return, the Kremlin is said to no longer seek a change of power in Ukraine.
Against the background of the sanctions, the Russian central bank has been forced to drastically restrict foreign exchange trading. Accordingly, Russian banks are no longer allowed to issue foreign cash to citizens. In addition, bank customers may only withdraw amounts of up to USD 10'000 from all foreign currency accounts.
|08:00||SZ||SECO Economic Forecasts|
|11:00||EZ||State and Government Heads Meeting|
|13:45||EZ||ECB Monetary Policy Announcement|
|14:30||EZ||ECB Press Conference|
|14:30||US||Consumer Prices (February, m/m)||+0.6%|
|14:30||US||Consumer Prices (February, y/y)||+7.5%|
|14:30||US||Core Consumer Prices (February, y/y)||+6.0%|
|14:30||US||Initial Jobless Claims (weekly)||215,000|
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, E-Mail: email@example.com
Source: LGT Bank (Switzerland) Ltd.
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