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Markets mixed ahead of inflation data, earnings

US stocks finished last week with yet more record highs while Asian equity markets started off the new week in the red. In a second round of parliamentary elections over the weekend, France’s left-wing coalition thwarted gains made by the far right in the first round. With no party or coalition appearing to have reached an absolute majority, the results may lead to political paralysis in the G7 economy. This week, investors will focus particularly on the release of the US Consumer Price Index as well as the start of earnings season.

Shane Strowmatt, LGT
Reading time
5 minutes
Mixed markets
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The week’s major market-relevant events include Federal Reserve Chair Jerome Powell’s semiannual monetary policy report to US Congress on Tuesday. Starting midweek, a series of inflation releases will reveal how quickly central banks around the world are approaching their inflation targets. On Wednesday, China releases inflation data, while Germany and the US report consumer prices on Thursday. The macroeconomic week wraps up with German retail sales, the US Producer Price Index and University of Michigan Consumer Sentiment Index on Friday. Earnings season also kicks off on Friday with second-quarter figures from US banks J.P. Morgan, Wells Fargo and Citigroup.

Japanese real wages fall 26 months in a row

In the Asia-Pacific region, stock markets were in the red to start the week as traders awaited key inflation data out of the US later in the week. In Tokyo, the Nikkei 225 was trading roughly flat after real wages fell 1.4% in May when compared with the same period last year. It was the 26th month in a row of falling real wages. In South Korea, the Kospi was down 0.1%. Tech giant Samsung was trading slightly in positive territory, despite a strike by the company’s largest union for more pay and holiday leave, which began Monday. Australia’s S&P/ASX 200 lost 0.7%. Hong Kong's Hang Seng Index was down 1.8%, while the CSI 300 was trading 0.5% lower.

US unemployment rate ticks up

The US employment report released Friday contained mixed data with the unemployment rate increasing to 4.1% in June, but nonfarm payrolls coming in slightly higher than market expectations at 206,000 jobs during the month. Altogether, traders interpreted the report as likely to aid the Federal Reserve in cutting rates soon, which helped to drive stock indices in New York to fresh record highs. The S&P 500 gained 0.5% and the Nasdaq-100 was up more than 1%. Both indices closed at new record highs. The Dow Jones Industrial finished Friday’s session 0.2% higher.

German industrial rebound stalls

Germany’s industrial output fell by 2.5% in May when compared to the previous month. Analysts had expected to see mild growth on Friday. Europe’s industrial powerhouse has struggled to recover this year with industrial orders falling for five months straight in May and the Manufacturing Purchasing Managers’ Index remaining deep in contractionary territory (43.5 in June). Germany’s DAX finished Friday’s session 0.1% higher, while the Euro Stoxx 50 lost 0.2%.

Corporate and macroeconomic calendars

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

Economic data in focus: German trade balance, Sentix investor confidence for the eurozone.

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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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