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LGT Navigator: Investors hope for more visibility from quarterly figures

July 14, 2020

In the US, the big banks are presenting their quarterly reports today. Speculation about a corona vaccine has created a good mood on financial markets – but US markets were unable to sustain the profits. In California, bars and restaurants will have to close again.

Gold

The earnings season for the second quarter is kicking off: On Tuesday the major US banks JPMorgan Chase, Citigroup and Wells Fargo will present their quarterly reports. The results of other stock market heavyweights in the US and Europe will follow in the coming days and weeks. Investors hope that the figures will give them a more accurate insight into how the corona pandemic is affecting the economy. So far, investors are largely in the dark, as many companies have refrained from issuing forecasts after the first quarter, and analysts have revised their estimates downwards due to the high level of uncertainty. 

PepsiCo provided a first positive surprise on Monday. Although the corona crisis has reduced the results of the lemonade and snack manufacturer, analysts had predicted even weaker figures. As a result, the shares recorded slight gains. PepsiCo again refrained from issuing an outlook. 

Speculation on corona vaccine boosts stock markets

Speculation about a vaccine against the coronavirus also contributed to the good mood on the stock markets. The US Food and Drug Administration (FDA) has granted an accelerated approval procedure for two possible vaccines. The US pharmaceutical group Pfizer and the Mainz-based biotechnology company Biontech are involved in the development. Investors reacted euphorically: On the Nasdaq, Biontech shares rose by up to +20% and finally closed +15.2%. Pfizer shares gained +4.1%.

The S&P 500 temporarily recovered from the losses since the beginning of the year and made it into the profit zone – but the rally ran out of steam shortly before the end of trading and the blue chip barometer and the Nasdaq Composite closed with losses. California had previously announced that it would partially withdraw its easing measures in response to the growing number of Covid-19 infections. Governor Gavin Newsom has ordered that bars have to close again. Restaurants, cinemas and museums must also restrict their operations. California is one of the corona hotspots in the US, the state counts more than 320 000 infected people.

China's exports are rising

Chinese exports rose surprisingly in June. Exports rose by +0.5% compared with the same period last year. Analysts had expected a decline of -1.5%. Imports also recorded growth for the first time this year (+2.7%). Experts had predicted a minus of 10%. Nevertheless, the Asian stock markets were trading in deep red on Tuesday. The Shanghai Composite is down -1.3%, the Hang Seng in Hong Kong loses -1.7% and the Nikkei is down -1%.

German economy likely to grow again soon

The German economy should return to its growth path in the summer. This was stated by the Department of Economics in its status report, which was published on Monday. According to the report, the economic trough has been passed and economists expect an increase in gross domestic product in the third quarter. Among other things, the temporary reduction of the value-added tax, which is aimed at stimulating the consumer mood, should contribute to this. However, it is unclear whether the tax cut will even reach consumers.

Economic Indicators July 14

MEZ Country Indicator Last
06:30 JPN Industrial production (May) -8.4%
08:00 GBR Gross domestic product -20.4%
08:00 GBR Industrial production (May) -20.3%
11:00 EZ Industrial production (May) -17.1%
11:00 EZ ZEW economic expectations (July) 58.6
14:30 US Consumer price index (June) -0.1%
14:50 CHN Trade balance (June) 62.9 bn

Earnings Calendar July 14

Country Corporate Period
US JPMorgan Chase Q2
US Citigroup  Q2
US Wells Fargo Q2

 

 

 

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: David Wolf, +41 44 250 83 48, E-Mail: lgt.navigator@lgt.com
Source: LGT Bank (Switzerland) Ltd.

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