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LGT Navigator: Investors continue to focus on fiscal stimulus and successful vaccination campaigns

February 8, 2021

On Wall Street and in Asia, some indices remained at record levels, and for Europe's stock exchanges there are signs of a positive start to the new trading week. The impetus comes mainly from the anticipated further US economic stimulus package and statements by US Treasury Secretary Janet Yellen. Hopes in the ongoing Covid-19 vaccination campaigns and an easing of the infection dynamics in the corona pandemic also strengthened the risk appetite.

Investors continue to focus on fiscal stimulus and successful vaccination campaigns

The New York Stock Exchange recorded its fifth consecutive day of gains on Friday, and the S&P 500 and the Nasdaq technology exchange even posted new record highs. The Dow Jones Industrial gained +0.3% to 31'148.24 points at the end of the week, securing a weekly gain of almost +4%. The S&P 500 ended the past trading week with a daily gain of +0.39% at 3'886.83 points and the Nasdaq 100 exited with +0.32 at 13'603.96 points. In Europe, the last week also ended with gains. In Frankfurt, the DAX went into the weekend at 14'056 points, posting a +4.6% gain for the week.

In Asia, most stock indices got off to a solid start to the week for the most part and in some cases moved close to record levels. Hopes of further fiscal policy stimulus from Washington and confident statements by the new US Treasury Secretary Janet Yellen regarding the stimulus package, as well as hopes that vaccines will soon bring relief in the corona crisis, should also ensure a positive start to the week on Europe's stock exchanges. In any case, the futures markets are signaling a friendly start to trading. In Italy, former ECB chief Mario Draghi is trying to form a new government. A second round of political consultations will start this Monday afternoon from 3pm (CET).

US labor market on recovery path, but without much dynamic

The US labor market is on the road to recovery at the start of the year, following a temporary setback in December, but the pace of recovery is tenuous. The US economy added 49'000 jobs in January, while an increase of 105,000 jobs was expected by economists. In addition, the development in December was even weaker than initially calculated. Accordingly, 227'000 jobs were lost at the end of the year. In an initial estimate, a loss of 140'000 jobs had been assumed. At the same time, however, the unemployment rate fell unexpectedly sharply from 6.7% in the previous month to 6.3%. On the other hand, wage growth has weakened considerably in the space of a month: hourly wages have risen by 0.2% compared with December, when they were still up 1%. The report also looked at job market developments during the corona crisis. According to the report, a total of 22 million jobs were lost in March and April last year as the economy stalled for several weeks. Starting in May, the number of jobs began to increase again, but pre-crisis levels have not yet been reached and growth has slowed in recent months. Market observers expect the recovery to accelerate in the spring as the number of people vaccinated steadily increases and protective measures are likely to be eased. Positive stimulus could also come from another corona aid package: US Congress is currently negotiating a USD 1.9 trillion aid package.

Biden is willing to push corona stimulus package through if necessary against the resistance from Republicans

According to US President Joe Biden, further government aid to alleviate the corona crisis is absolutely necessary and may have to be pushed through the parliament even without political consensus. Millions of Americans have lost their jobs as a result of the pandemic, millions of people are behind on their rent payments, millions of people do not have enough to eat, Biden said. In view of this, he felt compelled to act and to launch the aid package, if there was no other way, even without the support of the Republicans in Congress. For now, however, he said, the White House remains committed to seeking bipartisan agreement.

Approval sought for another corona vaccine

The US pharmaceutical group Johnson & Johnson has applied for emergency approval for its corona vaccine in the US. The company also plans to submit a similar application in Europe in the coming days. If the product is approved, it would be the first vaccination that only needs to be injected once. Another advantage is the easier handling, as the vaccine can be stored at refrigerator temperature. Compared with other already approved vaccines, however, the efficacy of Johnson & Johnson's vaccine is significantly lower, according to study results.

Dampener for German industry

German industrial companies landed fewer orders than expected in December. Orders fell by -1.9% compared with the previous month. Analysts had forecast a -1% decline. This is the first time orders have fallen since the outbreak of the corona pandemic. However, orders is still above pre-crisis levels and has increased by +6.4% year-on-year. In the coming months, German industrial production should continue to recover, analysts expect. However, the strict protective measures in numerous countries are likely to dampen momentum.


Economic Indicators February 8

MEZ Country Indicator Last
00:50 JP Current account (December)
n.a. CN Trade balance 
07:45 CH Unemployment rate (January) 3.5%
08:00 GE Industrial production (m/m, December) +0.9%
10:30 EZ Sentix Investor Economic Outlook (February) +1.3

Earnings Calendar February 8

Country Corporate Period
JP Softbank Q4


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US employment growth remains dynamic at the beginning of the year