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LGT Navigator: Oil price creeps into center stage

September 28, 2021

Oil prices continued to soar on Monday, with Brent crude reaching a three-year high. While equity markets started the week without a clear trend, US government bond yields increased. The German stock market started the new week with gains after the narrow election victory of the SPD. However, until it is clear who will become Chancellor and which coalition will call the shots in Berlin in the future, due to the difficult coalition negotiations, investors will also have to exercise patience.

Oil price creeps into center stage

Oil is once again in the spotlight after the North Sea Brent crude reached USD 80 per barrel, the highest level in three years. The price of US crude oil WTI climbed simultaneously above USD 76, a two-month high. The background to this is, on the one hand, a global supply deficit as a result of the economic recovery from the corona crisis, and an increased forecast by Goldman Sachs. While the start of the week on the stock markets was more or less directionless, the yields of US government bonds rose. The yield on the ten-year Treasury climbed to 1.5%, the highest level since June. On the New York Stock Exchange, the Dow Jones Industrial closed +0.21% higher at 34,869.37 points on Monday, while the S&P 500 fell -0.28% to 4,443.11 points. On the Nasdaq technology exchange, prices came under greater pressure. The Nasdaq 100 lost -0.81% and ended the day at 15'204.83 points.

US industry reports solid order intake

Industrial companies in the US recorded significantly more orders than expected in August. Compared to the previous month, orders for durable goods increased by +1.8%, three times as much as economists had forecast. This marked the fourth consecutive monthly increase in this category. Orders for civilian capital goods (excluding aircraft), which are seen as an indicator of companies' propensity to invest, rose +0.5% month-on-month.

German economy sets positive tone in the third quarter

The German economy is likely to have grown strongly in the third quarter and to have continued its recovery from the Corona crisis at an accelerated pace. This is the assumption of the German central bank in its monthly report for September published yesterday. Following the -2% slump in the corona lockdown in the first quarter, German GDP increased by +1.6% in the second quarter. According to the Bundesbank, momentum is likely to have accelerated further in the third quarter. Private consumption and the service sector received a strong boost from the easing of pandemic-related restrictions. Meanwhile, however, supply bottlenecks and shortages of materials had a noticeable impact on industry.

German export industry more optimistic again

According to a recent survey by the Munich-based economic research institute Ifo, export-oriented companies in Germany are again more confident about their export prospects than they were in August. The barometer for export expectations rose by four points to 21 points in September. The auto and electrical industries as well as the chemicals sector were particularly optimistic. Only the textile industry is currently expecting weaker exports.


Economic Indicators September 28

MEZ Country Indicator Last period
08:00 GE GfK Consumer Climate (October) -1.2
08:45 FR Consumer Confidence (September) 99.0
14:00 EZ ECB President Lagarde Speach
14:30 US Trade Balance (July) USD -86.8bn
15:00 US S&P/CaseShiller House Prices 20 biggest cities (July, m/m) +1.8%
16:00 US Consumer Confidence (September) 113.8
16:00 US Fed Governor Powell Testamony US Congress


Earnings Calender September 28

Country Company Period
GE Hella Q1


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Source: LGT Bank (Switzerland) Ltd.

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