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LGT Navigator: Quiet month end expected

May 31, 2021

Due to a holiday in the United States (Memorial Day) as well as in the UK (Spring Bank Holiday) and the US labor market data due at the end of this week, the trading week is expected to start quietly. In Asia, the stock market indices tend to be inconsistent, after Wall Street could not hold initial gains on Friday and went into the weekend with extremely moderate gains. In Europe, in the absence of new impetus, a quiet end to the month can be expected. The focus will already be on the release of new US labor market data next Friday.

Quiet month end expected

On the New York Stock Exchange, the indices were robust before the long weekend in view of recently quite solid economic data and the prospect of further fiscal policy support, but were unable to save the gains booked at the beginning of trading over the finish line. Profit-taking ensured that the Dow Jones Industrial ultimately only increased +0.19% to 34'529.45 points. The benchmark index thus posted a modest gain of +0.9% on a weekly basis. The S&P 500 +0.04% closed on Friday virtually unchanged from the previous day at 4'204.11 points (+0.08%). In the bond market, the yield on ten-year US government bonds eased slightly to 1.58%. In Asia, the worse-than-expected industrial production in Japan as well as the slightly lower purchasing managers' indices (PMI) in China caused a slightly negative start to the week.

US jobs report – the highlight of this week

The main event of the week is due on Friday when the latest US labor market figures are published. Analysts expect a strong increase of around +650'000 jobs, after significantly fewer jobs were created in April than forecasted.

Today, the Organization for Economic Cooperation and Development (OECD) is scheduled to present its latest economic forecasts at 10:00 am (CET). Against the backdrop of the progressing vaccination campaigns and the containment of the corona pandemic, a slightly confident outlook is expected.

ECB top representative sees euro economy at turning point

ECB Director Isabel Schnabel expressed confidence that the economic outlook in the euro area has brightened considerably thanks to falling corona infection figures and progressing vaccination campaigns. Against this background, the Governing Council will decide on June 10 whether to continue the recently increased purchase volume of the PEPP pandemic program. The decisive factor will be the assessment of financing conditions and the inflation outlook.

Strong rise in import prices in Germany

German import prices increased by a stronger than expected +1.4% month-on-month and +10.3% year-on-year in April. On an annual basis, this was the strongest price increase recorded since December 2010. The increase in import prices was driven by energy prices, which rose by +101.3% year-on-year due to the base effect of the corona crisis, thus recording the highest annual rate of increase in over ten years. The development of import prices is regarded as an indicator of inflationary trends.

France back in recession with highest inflation rate since late 2018

The French economy was once again in a “technical” recession in the first quarter. According to the revised data published on Friday, the economic output of the second-largest economy in the eurozone declined by -0.1% compared to the previous quarter. This comes after French GDP had already contracted by -1.5% in the final quarter of 2020. Due to the hard lockdown, private consumption stagnated and investments also increased only slightly at the beginning of the year. At the same time, higher energy prices drove inflation in France in May to its highest level since the end of 2018, with consumer prices rising by +1.8% year-on-year compared with an inflation rate of +1.6% in April.

Economic Indicators May 31

MEZ Country Indicator Last period
00:00 US/UK Holiday
08:00 GE Import Prices (May, y/y) +6.9%
09:00 SP Consumer Prices (May, y/y) +2.0%
10:00 IT Consumer Prices (May, y/y) +1.0%
14:00 GE Consumer Prices (May, y/y) +2.1%

 

Earnings Calender June 1

Country Company Period
US Dell Q1
US Zoom Video Q1

 

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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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