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LGT Navigator: Quick recovery on stock markets to be taken with caution

July 21, 2021

After a weak start to the week under the impression of a noticeable increase in corona concerns, share prices on the international stock exchanges recovered on Tuesday, making up a large part of Monday's losses. However, in view of the uncertain pandemic development, investors are likely to remain on their guard and volatility could increase. Fresh impetus should be provided by further corporate results.

Quick recovery on stock markets to be taken with caution

After a disappointing start to the week, the stock markets have regained their footing. After the EuroStoxx 50 slipped to its lowest level in two months on Monday amid growing concerns that the rapid spread of the delta variant could bring renewed lockdowns, the European equity benchmark gained +0.71% to 3'956.34 points on Tuesday. In New York, indices followed the recovery and the Dow Jones Industrial closed +1.62% higher at 34'511.99 points. The S&P 500 also corrected much of its previous day's loss and ended yesterday's trading session with a gain of +1.52% at 4'323.06 points. On the technology exchange Nasdaq, it went up by about +1.2%. A grain of salt delivered Netflix after the market close. The streaming service was able to attract so few new users with its series and films in the second quarter as never before in a quarter and disappointed analysts' expectations.

In Asia, stock indices also joined the positive guidance and the majority are trading higher this morning. The focus continues to be on the quarterly financial statements of listed companies. Today, for example, with Novartis, Daimler, SAP, or Johnson & Johnson.

Japan's exports continue to show strength

Japanese exports continued their recovery from the corona shock last year with a lot of momentum. Thanks to strong export figures from the auto industry and chip manufacturers, exports increased by +48.6% year-on-year in June. Already in May, Japanese exports had increased by almost +50%, showing the strongest growth since 1980. Compared to the previous month, exports increased by +2.4%.

US building permits point to lower demand

Developments on the housing market in the US were mixed in June. While the number of new housing starts increased more strongly than analysts had expected, the number of building permits surprisingly declined. Housing starts increased by +6.3% on a monthly basis, while an increase of +1.2% had been expected on average. In contrast, building permits, which are more meaningful for future construction activity, fell by -5.1% in June (consensus +0.7%) to an eight-month low. This follows a -2.9% month-on-month decline in building permits in May.

German producer prices rise more strongly than at any time in almost forty years

A sharp rise in prices at producer level highlights the price pressure in Germany. In June, producer prices rose +8.5% on an annual basis, the strongest increase since 1982. Compared to the previous month, prices increased by +1.3%, driven by the price development of intermediate goods (+12.7% year-on-year) and energy (+16.9%) , the statistics office explained.

Economic Indicators July 21

MEZ Country Indicator Last period
01:50 JP Exports (June, y/y) +49.6%
01:50 JP Imports (June, y/y) +27.9%


Earnings Calender July 21

Country Company Period
SZ Novartis Q2
SZ Julius Baer H1
SZ Georg Fischer H1
SZ Temenos Q2
GE Daimler Q2
NL Akzo Nobel Q2
SP Iberdrola Q2
FIN Stora Enso Q2
US Johnson & Johnson  Q2
US Coca-Cola Q2
US Verizon Q2
US Texas Instruments Q2
US Harley Davidson Q2


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Source: LGT Bank (Switzerland) Ltd.

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