On the stock exchanges, the mood remains pervasive and characterized by caution. In New York, the Dow Jones Industrial closed at 32'774.41 points -0.18% lower and the market-wide S&P 500 went out of the day's business at 4'122.47 points (-0.42%). Growth-oriented technology stocks were the most pressured as they suffer from increased financing costs in the event of further hefty interest rate hikes. The indices on the Nasdaq lost about -1.2%. Also negative was the outlook from chipmaker Micron, which expects weaker sales in the fourth fiscal quarter due to declining demand.
Stocks in the Asia-Pacific region also fell in midweek. Here, too, the inflation trend was in focus, after consumer prices in China rose in July with an annual inflation rate of +2.7%, the highest since July 2020. In Hong Kong, the Hang Seng Index fell by around -2% and the Hang Seng Tech Index even by around -3%. In Tokyo, the Nikkei 225 loses about -0.7% and in Shanghai the Composite Index about -0.5%.
In the bond market, the yield of ten-year US government bond before the publication of the new US inflation data at 2.79%.
The focus today at 14:30 (CET) is the consumer price data from the United States. Analysts assume on average that the inflation rate has weakened from the record value in June of +9.1% to +8.7% in July. Among other things, the decline in gasoline prices in the USA points to a certain easing. According to the AAA automobile association, the price of regular gasoline fell by 67 cents per gallon last month but is still 87 cents higher than a year ago, mind you. At the same time, overall commodity prices have also dropped significantly.
US President Joe Biden signed a bill for a USD 52.7 billion investment package for the US semiconductor industry. This is intended on the one hand to counter the continuing shortage of chips for the automotive sector, for example, and on the other hand to strengthen the competitiveness of the United States vis-à-vis China, the White House said. The bill also provides for a 25% tax credit for investments in chip factories. In addition, USD 200 billion over ten years is to flow into scientific research in the United States.
In its latest forecasts, the Organization for Economic Cooperation and Development (OECD) in Paris predicts a weakening of growth in most major economies due to high inflation and the slump in consumer confidence. Weaker economic growth is expected in the USA, the UK, Germany, France, and Italy in particular. For Japan, however, leading indicators point to stable growth close to the long-term trend, while the emerging markets show a mixed picture.
Britain's central bank will likely have to tighten its key interest rate further to combat inflationary pressures, Deputy Central Bank Governor Dave Ramsden said in an interview with Reuters. The Bank of England expects inflation, currently above 9%, to peak at 13% later this year. The central bank had already stepped up its fight against inflation last week with the biggest interest rate hike since 1995. Since December last year, this was already the sixth interest rate step. The central bank is aware that the rate hikes are contributing to an already very difficult environment, but it must act vigorously to ensure that inflation does not take hold, Ramsden said.
|08:00||GE||Consumer Prices (July, y/y)||+8.2%|
|10:00||IT||Consumer Prices (July, y/y)||+8.4%|
|14:30||US||Consumer Prices (July, m/m)||+1.3%|
|14:30||US||Consumer Prices (July, y/y)||+9.1%|
|14:30||US||Core Consumer Prices (July, y/y)||+5.9%|
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Editor: Alessandro Fezzi, E-Mail: email@example.com
Source: LGT Bank (Switzerland) Ltd.
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