Contact

05/12/2022

Flash boursier

More

05/12/2022

Flash boursier

Key data

 USD/CHFEUR/CHFSMIEURO STOXX 50DAX 30CAC 40FTSE 100S&P 500NASDAQNIKKEIMSCI Emerging Markets
Latest0.940.9911'198.133'977.9014'529.396'742.257'556.234'071.7011'461.5027'777.90973.85
Trend
 
 
 
 
 
 
 
 
 
 
 
YTD2.72%-4.79%-13.03%-7.46%-8.53%-5.74%2.32%-14.57%-26.74%-3.52%-20.95%

(values from the Friday preceding publication)

 

US economy continues losing traction

Equity markets rose again last week, egged on by the Fed chief’s speech signalling the likelihood of some moderation in the pace of rate hikes as the US economy stages its orderly landing. Also lowering the risk premium were the first signs of easing in China’s zero-covid policy.

Bond yields eased significantly in response, with the US 10-year back at 3.5% and the Bund at 1.85%.

The US economy continues to lose traction, pinned back by the central bank’s policy of steady rate rises since the beginning of the year. Take, for example, the contraction in manufacturing activity, with the ISM’s manufacturing PMI clocking in below expectations at 49.0 down from 50.2 in October. The rising cost of borrowing is hurting producers of goods.

Inflation slowed slightly in October. All the while, Americans continued to spend, taking advantage of wage increases and abundant savings. Consumer prices rose 6.0% year on year following an increase of 6.3% in September.

The number of jobless claims fell slightly in the week ending 26 November, dipping to 225,000 from 241,000 in the previous week. In contrast, the total number of jobseekers now exceeds the 1.6 million mark, following the latest increase of 57,000. On the positive side, the monthly non-farm payrolls report, out on Friday, confirmed the strength of the labour market. In November, the US continued to create jobs, adding 263,000. The average hourly wage was up by 0.6%.

The S&P 500 ended the week up by 1.13% while the tech-heavy Nasdaq, more sensitive to interest rate expectations, advanced by 2.09%.

Across in Europe, ECB boss Christine Lagarde left nothing off the table as regards the size and number of future rate hikes. Everything depends on a number of variables, she said.

In the Eurozone, year-on-year inflation slowed to 10% in November, down from 10.6% in the previous month. Core inflation was steady at 5%. All this suggests that pricing pressures have eased, which is an extremely encouraging development. Finally, manufacturing activity contracted slightly with the PMI ebbing to 47.1, down from 47.3 in October.

Market participants will this week be watching for real signs of covid policy easing in China, as has been promised, and the impact of this on the economy, plus publication of services PMI indices.

 

Individual sector performances

2022 has featured the comeback by value-style stocks after years of underperformance against their growth peers. Investors have suddenly become more attentive to fundamentals, leading them to rebalance their portfolios by adding in some safety in the guise of defensive sectors (healthcare, utilities, telecoms and insurance), amid the economic slowdown.

In short, the global economy suffered from runaway inflation, less accommodating central banks, war eastwards of Europe and the continued pandemic in China. All this adversity was too much for markets, which fell back sharply, sending every asset class into a death spiral and leaving investors bereft of investment returns. The only areas providing solace were the US dollar and the energy sector (+63%).

Over the past two months, the trend has begun reversing direction. A renewed appetite for risk has been visible among investors, attracted by appealing valuations. As an illustration, tech has rebounded by almost 11% in the last month in the US and by more than 17% in Europe. Real estate also had a strong month in November, as did retail.

Market valuations are quite affordable on the whole, but the slowing economy is still expected to dampen earnings growth.

 

Graph. 1.

 

 

This document is provided for your information only. It has been compiledfrom information collected from sources believed to be reliable and up to date, with no warranty as to its accuracy or completeness.By their very nature, markets and financial products are subject to the risk of substantial losses which may be incompatible with your risk tolerance.Any past performance that may be reflected in this documentis not a reliable indicator of future results.Nothing contained in this document should be construed as professional or investment advice. This document is not an offer to you to sell or a solicitation of an offer to buy any securities or any other financial product of any nature, and the Bank assumes no liability whatsoever in respect of this document.The Bank reserves the right, where necessary, to depart from the opinions expressed in this document, particularly in connection with the management of its clients’ mandates and the management of certain collective investments.The Bank is a Swiss bank subject to regulation and supervision by the Swiss Financial Market Supervisory Authority (FINMA).It is not authorised or supervised by any foreign regulator.Consequently, the publication of this document outside Switzerland, and the sale of certain products to investors resident or domiciled outside Switzerland may be subject to restrictions or prohibitions under foreign law.It is your responsibility to seek information regarding your status in this respect and to comply with all applicable laws and regulations.We strongly advise you to seek independentlegal and financial advice from qualified professional advisers before taking any decision based on the contents of this publication.