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LGT Navigator: Extended bull run on economic optimism

February 16, 2021

Falling new corona infection figures and a slowly progressing global vaccination campaign, as well as continuing hopes for the anticipated US government corona aid package and a recovery of the global economy, continue to ensure a buying mood and a solid start to the week on the stock exchanges. Even without any new impetus from Wall Street, which remained closed on Monday due to a holiday, the indices in Europe and Asia continued their rally. 

Extended bull run on economic optimism

On the Tokyo Stock Exchange, the Nikkei 225 index was able to hold above the mark of 30'000 points and trades this morning around +1.3% higher than the previous day. In Hong Kong, the Hang Seng index is up around +1.7% and reached a 32-month high in the first trading session after the Lunar New Year holidays. However, the markets in mainland China remain closed until Thursday for the New Year holiday. In Europe, the new week also began with further gains. The EuroStoxx 50 closed +1.04% higher at 3'734.20 points, exiting trading near the day's high and trading just shy of pre-corona levels. The drivers continue to be expectations of further fiscal policy stimulus and a longer-term continued loose monetary policy of central banks. In addition, hopes currently prevail that the pandemic can be overcome through ongoing vaccinations and further approvals of new vaccines, thus consolidating the recovery of the global economy. The optimistic view is also causing bond yields to rise. The yield on ten-year US government bonds rose by around five basis points to 1.24% in Asian trading – the highest level since March last year.

G7 seeks better cooperation on corona crisis

Leaders of the seven leading industrialized nations, the G7, will focus their talks on combating the corona pandemic at a virtual conference on Friday (February 19). This was confirmed by British Prime Minister Boris Johnson, who currently holds the G7 presidency. Johnson wants to call on his colleagues to cooperate more closely, especially in the distribution of Corona vaccines. A “new, global approach“ must be taken in this regard, he said. For the first time, the new US President Joe Biden will also be present at a G7 summit. On the same day, Biden will also attend the virtual Munich Security Conference.

Recovery in the euro area industrial sector loses momentum

The industrial sector in the eurozone recorded a decline in production in December for the first time since last spring. On a monthly basis, production fell by -1.6%, twice as much as analysts had expected. After the massive slump in March and April 2020, output had risen for seven months in a row. Declining at the end of last year was mainly the production of capital goods, which fell by -3.1% month-on-month. Year-on-year, euro area output fell -0.8% in December (consensus -0.2%).

Pandemic leaves skid marks on Europe's foreign trade

Exports from the 19 euro area countries fell by -9.2% year-on-year last year, according to Eurostat, the statistics office. At the same time, imports fell by -10.8% compared to the previous year. In the trade balance, the surplus increased to EUR 234.5bn in the eurozone in 2020 as a whole, from EUR 221.0bn in the previous year. The main trading partner with the EU in 2020 was China. Imports from the People's Republic rose by +5.6% last year, while exports from the EU to China increased by +2.2%. In contrast, foreign trade with the US declined significantly. Exports from the EU to the United States fell by -8.2% and imports from the US to the EU fell by -13.2%.


Economic Indicators February 16

MEZ Country Indicator Last
00:00 CN Holiday
11:00 GE ZEW Investors Economic Sentiment (February) 61.8
11:00 EZ GDP Q4 (q/q)  -0.7%
14:30 US NY Fed Empire State Manufacturing Index (February) +3.5

Earnings Calendar February 17

Country Corporate Period
SZ Schindler Q4
GE Beiersdorf Q4
FR Kering Q4
FR Capgemini Q4
NL Ahold Q4
UK Rio Tinto Q4


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