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LGT Navigator: Positive start to the week – earnings season in focus

July 12, 2021

On the stock markets, the recovery rally continued at the start of the week, driven by positive guidance and record highs on Wall Street as well as monetary easing in China. This helped to calm recently heightened fears about global growth against the backdrop of a rapidly spreading delta variant. The focus now also turns to this week's upcoming start to the corporate reporting season.

Positive start to the week – earnings season in focus

The stock markets did recover from the brief period of weakness on Friday, and the positive trend also continued in Asia this morning. However, the pandemic development is likely to remain in the focus of the capital markets. This is because the infection figures driven by the delta variant are fueling fears that new restrictions are looming despite the advanced but slowed vaccination campaign.

On Wall Street, investors took advantage of the lower price levels before the weekend, especially in standard stocks. The Dow Jones Industrial closed +1.3% higher at 34,870.16 points, saving a minimal gain of +0.2% for the week. The S&P 500 ended last week with a daily gain of +1.13% at 4,369.55 points at record levels. On the technology exchange Nasdaq, however, the gains were limited on Friday. The Nasdaq 100 selection index gained +0.71% and went into the weekend at 14'826.09 points. In Europe, the EuroStoxx 50 also had a solid daily performance on Friday. The European benchmark index rose +1.42% to 4,048.27 points, recovering most of the losses suffered on Thursday.

In Asia, equity indices started the new week with momentum. In Tokyo, the 225-stock Nikkei index traded around +2% higher than on Friday and in Hong Kong, the Hang Seng index rose by around half a percent. Investors are now eagerly awaiting the earnings season which begins tomorrow. The Wall Street banks JPMorgan and Goldman Sachs make the start. In addition, the latest inflation data from the US (Tuesday) and the accountability report of Fed Chairman Jerome Powell (Wednesday and Thursday) are in focus.

China's central bank eases monetary policy due to economic risks

The People's Bank of China on Friday cut its reserve requirement ratio, which commercial banks must hold at the central bank, by half a percentage point to 8.9%. The move comes amid concerns that the economic recovery may be weakening, which recent purchasing managers' surveys have indicated.

G20 serious about global tax reform

The 20 major industrialized countries agreed in Venice on Saturday on a minimum tax for companies that is to come into force in 2023. The plan is, firstly, to tax all internationally active companies – regardless of where they are based - at a minimum of 15%. This should make it no longer worthwhile for corporations to shift their profits to tax havens. Secondly, companies should no longer be taxed only in their home country, but also where they actually generate profits. This applies above all to large technology companies.

Bundesbank head Weidmann defends ECB strategy adjustment

The 20 major industrialized countries agreed in Venice on Saturday on a minimum tax for companies that is to come into force in 2023. The plan is, firstly, to tax all internationally active companies – regardless of where they are based - at a minimum of 15%. This should make it no longer worthwhile for corporations to shift their profits to tax havens. Secondly, companies should no longer be taxed only in their home country, but also where they actually generate profits. This applies above all to large technology companies.

Economic Indicators July 13

MEZ Country Indicator Last period
08:00 GE Consumer Prices (June, y/y) +2.4%
08:45 FR Consumer Prices (June, y/y) +1.8%
12:00 EZ Meeting EU Finance Minister
14:30 US Consumer Prices (June, m/m) +0.6%
14:30 US Consumer Prices (June, y/y) +5.0%
14:30 US Core Consumer Prices (June, y/y) +3.8%

 

Earnings Calender July 13

Country Company Period
AUT Telekom Austria Q2 
US JPMorgan Chase Q2
US Goldman Sachs Q2
US PepsiCo Q2

 

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, +41 44 250 78 59, E-Mail: lgt.navigator@lgt.com
Source: LGT Bank (Switzerland) Ltd.

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