US stock exchanges started the new week with losses. After the major indices had ended the previous week with gains, the concerns about rising inflation and higher corona case numbers in parts of the world weighed on stock market sentiment. The S&P 500 lost -0.3% to 4'163.29 and the Dow Jones declined -0.2% to 34'327.79, while the Nasdaq Composite slipped -0.4% to 13'379.05.
In Asia, stock markets are trading firmer on Tuesday. The Nikkei gains +2.3% in Tokyo, defying recent economic data. Japan's economy contracted an annualized -5.1% from January to March, after growing in the previous two quarters. The Hang Seng in Hong Kong advances +1.2% and the Shanghai Composite trades almost unchanged.
The gold price is rallying at the beginning of the week and climbed to the highest level in three and a half months. The fine ounce cost up to USD USD 1'868.27 and was thus as expensive as last at the end of January. Analysts explain the increase in the price of the precious metal with the rising inflation expectations in the US. Concerns about higher inflation received a further boost last week, as consumer prices rose unexpectedly sharply in April. Gold has traditionally been used as a hedge against inflation.
Since the Federal Reserve has repeatedly signaled that it does not intend to adjust interest rates for the time being, the opportunity cost of investing in the metal remains low. That position was reiterated Monday by Richard Clarida, the Chairman of the Atlanta Federal Reserve. The economic progress is not yet so great that a change of course in monetary policy is indicated, he explained at an online conference. While there is upward pressure on prices, it is likely to be temporary, the Vice Chairman of the Fed said. In addition, he assured that the Fed will give financial markets a heads-up if it makes any adjustments to the bond-buying program.
The focus now shifts to the minutes of the last interest rate meeting of the Fed (Minutes), which will be published on Wednesday. Investors are hoping that this will provide further indications of how the central bank views the inflation trend.
The dispute over special tariffs on steel and aluminum imports from the EU to the US is gaining momentum as the two parties want to settle the conflict by the end of the year. The trade dispute has been simmering since 2018, when former US President Donald Trump imposed special customs on imports from the EU, citing national security interests. The EU had then imposed tariffs on American imports, including whiskey and motorcycles. Now, the EU's planned tightening of import duties is to be suspended for the time being, in order to focus instead on settling the conflict.
Sentiment among industrial companies in the New York metropolitan area clouded in May. The Empire State Index, which measures industrial activity in the state of New York, fell 2 points from the previous month to 24.3, according to the Federal Reserve Bank of New York. Analysts had expected a decline to 23.9 points. Orders and shipments continued to recover, however, prices for raw materials and inputs have risen sharply, the report said. In addition, delivery times have lengthened. The developments are likely to be the result of the economic upturn, which is leading to an increase in production worldwide.
Producer and import prices in Switzerland rose in April, increasing by 1.8% year-on-year, the statistics office reported. This was after prices had fallen at the beginning of the year. In particular, rising global commodity prices are responsible for the increase in prices. The development could also boost inflation: the producer price index is regarded as a leading indicator for consumer prices, as producers normally pass on higher costs to consumers.
Prices are also picking up in Italy. According to the Istat statistics office in Rome, inflation rose by +1% year-on-year in April, with energy prices in particular increasing.
|11:00||EZ||GDP (Q1, y/y)||-1.8%|
|14:30||US||Building permits (April, m/m)||+2.3%|
|14:30||US||Housing starts (April, m/m)||+19.4%|
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, +41 44 250 78 59, E-Mail: email@example.com
Source: LGT Bank (Switzerland) Ltd.
Risk Disclosure (Disclaimer)
This publication is an advertising material / marketing communication. This publication is for your information only and is not intended as an offer, solicitation of an offer, or public advertisement to buy or sell any investment or other specific product. Its content has been prepared by our staff and is based on sources of information we consider to be reliable. However, we cannot provide any confirmation or guarantee as to its being correct, complete and up to date. The circumstances and principles to which the information contained in this publication relates may change at any time. Information that has been published should therefore not be understood as implying that no change has taken place since its publication or that it is still up to date. The information in this publication does not constitute an aid for decision-making in relation to financial, legal, tax-related or other consulting matters, nor should any investment decisions or other decisions be made on the basis of this information alone. It is recommended that advice be obtained from a qualified expert. Investors should be aware that the value of investments can fall as well as rise. Positive performance in the past is therefore no guarantee of positive performance in the future. Investments in foreign currencies are also subject to fluctuations in exchange rates. We disclaim all liability for any loss or damage of any kind, whether direct, indirect or consequential, which may be incurred through the use of this publication. This publication is not intended for persons subject to legislation that prohibits its distribution or makes its distribution contingent upon an approval. Any person coming into possession of this publication shall therefore be obliged to find out about any restrictions that may apply and to comply with them. In line with internal guidelines, persons responsible for compiling this report are free to buy hold and sell the securities referred to in this report.