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Kick off to the Q1 earnings season

Four times a year, investors eagerly await the latest quarterly results from blue-chip companies. Today, major US banks such as J.P. Morgan and Citigroup will kick off the earnings season. It will be particularly interesting to see how the financial institutions assess the current situation and the risks in the banking sector. In the meantime, the sentiment on the trading floor has brightened thanks to a weakening of inflation and interest rate worries towards the weekend. 

Alessandro Fezzi, LGT
Temps de lecture
5 minutes
Corporate earnings season
© Shutterstock

On the New York Stock Exchange, the easing of inflation and interest rate concerns led to gains, with particularly technology stocks benefiting. On the Nasdaq, the indices rose by around 2%. However, blue chips also held up well and the Dow Jones Industrial rose above the 34’000-point mark for the first time since mid-February. The Dow closed at 34’029.69 points with a daily gain of 1.14%. The S&P 500 went out of trading at 4’146.22 points (+1.33%). In the bond market, the weaker rise in producer prices provided only brief relief and the yield of ten-year US government bonds climbed during the day from 3.4% to 3.45%. Given expectations of a more moderate US monetary policy stance, the US dollar fell to 1.1068 against the euro on Thursday, reaching its lowest level in just over a year.

As consumer prices before, the latest data on US producer prices also pointed to a weakening of inflationary pressure in the United States. On an annual basis, inflation at the manufacturer level declined more than expected in March to 2.7%, from 4.9% in the previous month. Analysts had expected an average of 3.0%. Compared with the previous month, producer prices fell by 0.5% in March. The question on financial markets is now whether the Fed will raise the key interest rate again by 25 basis points in May or whether it could take a pause on interest rates.

In Asia, Japan's Nikkei 225 rose by around 1% at the end of the week. In Seoul, the Kospi rose 0.7%. The Hang Seng Index in Hong Kong was unchanged, while the Shanghai Composite and Shenzhen Component rose 0.3% and 0.5%, respectively. 

In Europe, gains were driven by luxury goods stocks, led by LVMH. The EuroStoxx 50 closed almost 0.7% higher. A recent survey by the Munich-based Ifo Institute revealed that many economic experts expect inflation to remain at a high level globally in the current year. In terms of the global economy, the average inflation rate is expected to be 7%. Next year it is expected to be 5.9% and in 2026 around 5%. 

Corporate news in focus: In Europe, Hermes International Q1 sales and Ferrari Annual General Meeting. Q1 figures from the US UnitedHealth Group, Blackrock, J.P. Morgan Chase, Citigroup and Wells Fargo. 

Economic data in focus: In Germany, monthly report of the Federal Ministry of Economics (08:00 CET), in Switzerland producer and import prices for March (08:30), France consumer prices March (08:45), Spain consumer prices March (09:00). From the US, retail sales in March and import and export prices for March (14:30). Industrial production in March (15:15) and Uni Michigan consumer confidence for April (16:00). In Paris, the Constitutional Council announces its decision on pension reform at 18:00. At 17:30, US Treasury Secretary Janet Yellen speaks.

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi,
Source: LGT Bank (Switzerland) Ltd.

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