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ECB and tech earnings take centre stage

In addition to monitoring the situation in the Middle East, investors will focus on the European Central Bank’s interest rate decision and the first major technology earnings of the second-quarter reporting season this week. The ECB announces its policy decision on Thursday. Against a backdrop of recent pressure on artificial intelligence-related stocks, investors will assess the state of the AI build-out when Google parent Alphabet and Tesla report on Wednesday, followed by Intel on Thursday. Inflation data are due from Canada on Monday, the UK on Wednesday and Japan on Friday, with the UK also releasing labour market figures on Tuesday. On Friday, Purchasing Managers’ Indices provide updates on business activity in some of the world's largest economies, including France, Germany, the euro area, the UK, Japan and the US.

  • Date
  • Auteur Shane Strowmatt, Senior Investment Writer
  • Temps de lecture 5 minutes

Logos of the Magnificent Seven: Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla.
© istock/MicroStockHub

Brent crude rose 2.5% to USD 90.26 per barrel, while West Texas Intermediate (WTI) futures gained 2.2% to USD 83.55, as renewed US strikes on Iran heightened fears of disruption to oil shipments through the Strait of Hormuz. American forces conducted a ninth consecutive night of attacks on Iranian military targets after the US military reported a third service member killed in recent operations. The escalation has tightened global crude supplies as Gulf exports decline. The US dollar and gold were little changed, with the yellow metal trading around USD 4010 per ounce to start the week.

Asian shares diverge on AI concerns

Asian equities traded mixed on Monday as Korea’s Kospi fell 4.6% amid renewed concerns about elevated artificial intelligence valuations, while Chinese markets advanced on optimism over domestic AI innovation. Chinese startup Moonshot AI’s release of a lower-cost large language model prompted profit-taking in global technology shares, with Samsung Electronics and SK Hynix each losing about 4%. Japanese markets are closed for the Marine Day holiday, while India’s Nifty 50 declined 0.5%. Australia’s S&P/ASX 200 edged 0.1% higher. Mainland China’s CSI 300 rose 1.2%, and Hong Kong’s Hang Seng Index added 2%.

China leaves lending rates unchanged

The People’s Bank of China kept its one-year loan prime rate at 3% and its five-year rate at 3.5% on Monday, extending an unchanged policy stance to a fourteenth consecutive month. The decision was in line with expectations as policymakers maintained ample liquidity but avoided broad monetary easing. China’s exports and manufacturing have remained resilient, whereas weak household demand and the property sector continue to weigh on the uneven recovery.

US shares fall on AI fears

US equity markets declined sharply on Friday as concerns over artificial intelligence competition and the Iran war weighed on investor sentiment. The Dow Jones Industrial Average lost 0.8% to 52,146.42 points, while the S&P 500 fell 1% to 7457.69 and the Nasdaq-100 dropped 1.5% to 28,592.66 points, leaving the technology-heavy index down 4.1% for the week. Alibaba-backed Moonshot AI’s new Kimi K3 model intensified concerns that Chinese competitors could erode US technological leadership, sending Nvidia, Applied Materials and SpaceX lower by 2.2%, 5.6% and 5.4%, respectively.

Euro-area inflation slows in June

Euro-area annual inflation eased to 2.8% in June from 3.2% in May, Eurostat confirmed on Friday, though it remained above the 2.0% rate recorded a year earlier. Energy made the largest contribution to price growth, followed by services, while core inflation excluding energy, food, alcohol and tobacco fell to 2.4% from 2.6%. European stock indices mostly closed lower on Friday. The Euro Stoxx 50 fell 0.8%, while Germany’s DAX declined 0.3% and France’s CAC 40 lost 0.5%. Switzerland’s Swiss Market Index bucked the broader trend, rising 0.5%.

Corporate and economic calendar

Corporate news in focus: There is no major corporate news scheduled today.

Economic data in focus: Canadian Consumer Price Index (14:30).

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Editor: Alessandro Fezzi
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