Retail sales in the US remained unchanged in July at the level of the previous month, while analysts on average had expected a moderate increase of +0.1%. In addition, the previous month's figure was revised from +1.0% to +0.8%.
On the New York Stock Exchange, the Dow Jones Industrial closed -0.5% lower than the previous day at 33,980.32 points and the S&P 500 declined -0.72% to 4,274.04 points. On the Nasdaq, the daily losses were even more substantial with about -1.2%. The background was, the weakening consumption in the US and the prospect of further rising interest rates, confirmed by the FOMC minutes, published yesterday evening.
In Asia, stock markets tended to be in negative territory on Thursday. In Tokyo, the Nikkei 225 trades around -0.9% lower and in Hong Kong, the Hang Seng loses around -0.5%.
As indicated by the minutes (Minutes) of the last interest rate decision on July 27 of the Federal Open Market Committee (FOMC) of the Federal Reserve, the Fed will maintain its tightening course for the time being, but at some point, will slow the pace of rate hikes. In this respect, the impact of the previous rate hikes on economic development in the US would have to be reassessed in each case. Regarding the inflation trend, there are currently no significant signs of a slowdown, the minutes noted. However, the still high inflation continues to force the Fed to pursue a more restrictive monetary policy and thus further interest rate steps must be expected in the foreseeable future. Following the publication of the minutes, the US dollar weakened against the euro. In turn, the yield on ten-year US government bonds rose to just under 2.9%.
In the UK, the rise in the cost of living accelerated further in July. On an annual basis, the inflation rate climbed from +9.4% in June to +10.1% – the highest inflation rate since 1982. Moreover, the increase in consumer prices was significantly stronger than analysts had anticipated at +9.8%. Compared with the previous month, British consumer prices rose by +0.8% in July, twice as strongly as expected. Consumer prices were mainly driven by higher food and transport costs. The unchecked inflation poses a major challenge not only for the Bank of England, but certainly also for the new British prime minister, who has yet to be appointed.
The gross domestic product of the 19-euro countries grew by +0.6% in the second quarter compared with the previous quarter, but somewhat more slowly than the initial estimate of +0.7%. Nevertheless, economic growth accelerated compared with the first quarter, when an expansion rate of +0.5% was recorded. The strongest growth of the major euro economies was recorded in Spain with +1.1%, followed by Italy with +1.0% and France with +0.5%. In Germany, economic development stagnated in the second quarter.
|11:00||EZ||Consumer Prices (June, y/y)||+8.9%|
|11:00||EZ||Core Consumer Prices (June, y/y)||+4.0%|
|14:30||US||Philly Fed Manufacturing Indicator (August)||-18.6|
|14:30||US||Initial Jobless Claims (weekly)||262,000|
|16:00||US||Leading Indicator (July)||-0.8%|
|16:00||US||Existing Home Sales (July, m/m)||-5.4%|
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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