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LGT Navigator: Corporate reporting season gives stock markets tailwind – ECB in focus

July 22, 2021

While the ongoing corona pandemic continues to rattle investors nerves, the currently published round of corporate balance sheets mostly provides positive impulses and gives tailwind to the recent recovery on stock markets. The European Central Bank could take the opportunity today to provide more detailed information on the recently communicated strategy adjustments.

ECB in focus

Driven by some positively received quarterly reports of listed companies, the Dow Jones Industrial rose on Wednesday by +0.83% to 34'798 points and thus more than made up for the short-lived slump from the beginning of the week. The S&P 500 also climbed +0.82% to 4'358.69 points and on the Nasdaq technology exchange, the indices also posted daily gains of almost +1%. Positive impetus was provided by the ongoing corporate reporting season. Thus, Coca-Cola raised its sales forecast for the full year, as the demand for soft drinks thanks to the reopening of, restaurants, cinemas, theaters, and stadiums again significantly increased. Telecom provider Verizon reported strong subscriber numbers and its quarterly results significantly exceeded market expectations. Johnson & Johnson delivered positive earnings forecast for 2021 and Harley-Davidson posted its second consecutive quarterly profit.

In Asia, the recovery from the setback at the beginning of the week also continued. The broad MSCI index of Asia-Pacific equities outside Japan followed the positive cues from overseas and gained around +1%. Unlike Wall Street, however, most Asian indices are struggling to recoup their losses from the start of the week as Asia faces a rapid spread of the coronavirus delta variant amid a population that is still unvaccinated in many cases. China's regulatory crackdown on technology companies is also causing jitters.

Pandemic threatens to nip Olympic fire in the bud

The Tokyo Stock Exchange remained closed today for a holiday. Meanwhile, however, the number of new Covid-19 infections is rising in Japan just before the opening of the Olympics, and with it nervousness. In Tokyo, case numbers reached their highest level since mid-January, driven by the delta variant. Given this development, the Olympic flame is unlikely to ignite the enthusiasm of the Japanese population.

ECB's first interest rate decision after announced strategy adjustment

The European Central Bank (ECB) will most likely not communicate any immediate change in its monetary policy today and leave key interest rates at record lows. The pandemic situation and probably also the inflation trend appear too uncertain. However, at the following press conference (2:30pm CET), central bank chief Lagarde could go into more detail on the results of the review of her monetary policy strategy and possibly provide further details on the direction of monetary policy, the "forward guidance". It will also be interesting to see how the ECB assesses the current economic outlook. The tension had been stoked by ECB chief Lagarde herself in an interview with Bloomberg TV, saying “it will be an important meeting and there will be some interesting variations and changes.”

Economic Indicators July 22

MEZ Country Indicator Last period
08:45 FR Economic Sentiment (July) 107.0
13:45 EZ ECB Monetary Policy Decision -0.5%
14:30 EZ ECB Press Conference
14:30 US Chicago Fed Activity Index (July) +0.29
14:30 US Initial Jobless Claims (weekly) 360,000
16:00 US Leading Indicator (June) +1.3%
16:00 US Existing Home Sales (June, m/m) -0.9%
16:00 EZ Consumer Confidence (July) -3.3


Earnings Calender July 22

Country Company Period
SZ Roche H1
SZ Sika H1
FR Valeo H1
AUT Telekom Austria Q2
NL Unilever H1
UK Centrica H1
US Twitter Q2
US Intel  Q2
US Dow Chemical Q2
US Abbott Laboratories Q2


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