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LGT Navigator: Consolidation follows record chase

April 20, 2021

After the recent record highs, many investors seem to want to get their sheep in the dry for the time being. In addition to the ECB's monetary policy decision on Thursday, this week's focus is on the corporate reporting season, which is now gaining momentum. Furthermore, the mood on the capital markets will also be shaped by the further development of the corona pandemic, respectively the on the one hand tightened and on the other hand loosened economic restrictions.

Consolidation follows record chase

On the New York Stock Exchange, the stock indices weakened after their recent all-time highs and opened the week with moderate losses. The Dow Jones Industrial closed on Monday -0.36% lower at 34'077.63 points and the market-wide S&P 500 gave up -0.53% to 4'163.26 points. The profit-taking was most noticeable in technology stocks. Thus, the Nasdaq 100 and the Nasdaq Composite fell by almost -1% each – the sharpest decline in almost four weeks. This however after the technology stock exchange had risen within the last four weeks by approximately +9%. Asian stocks followed more or less the lead from Wall Street and futures point to a slightly lower opening on European equity markets.

Already at the start of the week, corporate earnings were in focus. The world's largest beverage company, Coca-Cola, was able to beat both earnings and revenue expectations despite the constraints of the corona pandemic. Other corporate results are also in focus later this week. Today, for example, Danone and Kering present their sales figures and Netflix presents its earnings statement for the first quarter. In the next few days, several other quarterly results will follow, including from Roche (sales, Wednesday), Nestlé, Credit Suisse  and SAP (Thursday) as well as LafargeHolcim, Daimler and American Express (Friday).

Can Apple score with new products?

Apple will present new products at an online event today (from 19:00 CEST). According to media reports, the focus will be on a new iPad Pro. The iPad Pro is aimed at users with higher demands on computing power and functions and is therefore more expensive. During the corona pandemic, tablets are in high demand and Apple was able to increase sales of iPads by around +40% in the fourth quarter of 2020. Apple could also introduce so-called AirTags. These are small plates that can be attached to objects such as keys to find them quickly.

German economy slowed down in the first quarter

The renewed lockdown and the VAT cut that expired at the turn of the year slowed down the German economy in the first quarter of 2021, according to estimates by the Bundesbank. In addition to the severely restricted consumption options due to the pandemic, consumers' early purchases in the second half of 2020 due to the temporary reduction in VAT are also likely to have contributed to the setback in private consumption, according to the German central bank's latest monthly report. Germany's leading economic research institutes are also forecasting a decline in economic output in the first quarter. On average, they expect GDP to slump by -1.8% compared with the previous quarter.

Japan's exports show strongest growth in three and a half years

Thanks to strong demand for cars, chips, semiconductor equipment and plastics, Japanese exports recovered in March from the sharp decline in February. Nippon's exports rose +16.1% for the year, registering the strongest growth since November 2017, compared with a -4.5% drop in the previous month against the backdrop of the Chinese New Year holiday. Exports to China, Japan's most important trading partner, rose the most in March: +37%. However, Japanese exports to the EU also recorded a strong increase of just under +13%, as did exports to the US, which rose by around +5%. In statistical terms, however, the sharp increase was also due to the low basis for comparison in the previous year, when the first wave of the pandemic caused the global economy to slump.



Economic Indicators April 20

MEZ Country Indicator Last
08:00 UK Unemployment Rate (February) 5.0%
08:00 GE Producer Prices (March, y/y) 1.9%

Earnings Calender April 20

Country Corporate Period
SZ Sika Q1
SZ Temenos Q1
FR Danone Q1
FR Kering Q1
UK Rio Tinto Q1
US Johnson & Johnson Q1
US Netflix Q1
US Travelers Q1
US Harley Davidson Q1
US Procter & Gamble Q1
US Philipp Morris Q1
US Abbott Laboratories Q1


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Source: LGT Bank (Switzerland) Ltd.

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