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LGT Navigator: Start to another challenging year

January 3, 2022

After a successful year on equity markets, investors are facing a continued challenging market environment at the start of the year. While omicron is causing record high infection figures, especially in the Western world, there is still a lack of scientific evidence regarding the dangerousness of the virus variant. However, if there are no widespread lockdowns, this should not significantly affect sentiment on capital markets. Inflation will remain a latent factor of uncertainty in the new year. The question remains as to how sustained the inflationary pressure will ultimately be.

Start to another challenging year

On Wall Street, stock indices ended the last trading day of the past year with slight losses in the absence of any impetus, with technology stocks on the Nasdaq falling most sharply. However, this did not change the fact that stock markets can look back on a successful year. The Dow Jones Industrial and the broad S&P 500 gained between +20% and +25% in 2021. In Europe, the EuroStoxx 50 also posted a moderate daily loss before New Year's Eve but can report a gain of a good +20% for the year as a whole.

The start on Asia's stock exchanges is characterized by caution and most stock indices record slight losses on the first trading day of the new year. In addition to the well-known uncertainties, the Chinese real estate group Evergrande once again attracted attention. Shares of China Evergrande were suspended from trading, in view of the publication of "important information".

Germany takes over G7 chairmanship

The German government, under new Chancellor Olaf Scholz, takes over the chairmanship of the G7 from the United Kingdom for one year on January 1. The focus will be primarily on pandemic control, climate protection as well as certainly geopolitical issues. A major summit will then be held at Schloss Elmau near Garmisch-Partenkirchen on June 26-28, 2022. The G7 countries are the United States, UK, Germany, France, Italy, Canada and Japan.

ECB driving on sight

Austria's central bank chief and ECB Governing Council member Robert Holzmann expects inflation and the pandemic to continue to be the defining uncertainty factors in 2022. The ECB, he said, must therefore "drive on sight". The greatest strength of monetary policy is its ability to act very quickly and to adapt to new circumstances in the shortest possible time. This is particularly important now and in the coming months, the central bank governor said. It will be crucial to start the gradual exit from negative interest rates and unconventional monetary policy and to avoid any proximity to monetary state financing, he said.

His ECB council colleague, Dutch central bank chief Klaas Knot, said the ECB could raise key interest rates in early 2023. The stage is set to end outstanding bond purchases by the end of the year, and then interest rates could also rise, Knot said in a newspaper interview. 

Singapore's economy grew at its fastest pace in more than a decade in 2021

The city-state's GDP expanded +7.2% last year after economic output contracted -5.4% in the first corona year of 2020. The last time the economy grew more strongly was in 2010. The government now projects GDP growth of +3-5% in 2022.

Economic Indicators January 3

MEZ Country Indicator Last period
09:15 ESP PMI Manufacturing (December) 57.1
09:30 SZ PMI Manufacturing (December) 62.5
09:45 IT PMI Manufacturing (December) 62.8
09:50 FR PMI Manufacturing (December) 54.9
09:55 GE PMI Manufacturing (December) 57.9
10:00 EZ PMI Manufacturing (December) 58.0
15:45 US PMI Manufacturing (December) 57.8


Earnings Calender January 5

Country Company Period
US Computer Technology Association (CES) Event in Las Vegas


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Source: LGT Bank (Switzerland) Ltd.

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