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LGT Navigator: Stock markets await a busy week of earnings

July 18, 2022

Robust economic data and good quarterly results of the major bank Citigroup boosted US stock markets on Friday. This week, investors are waiting for another round of important corporate results and the European Central Bank's monetary policy decision on Thursday. 

Wall Street

Asian stock exchanges start the new trading week on a friendly note. In Hong Kong, the Hang Seng gains around +2.6% and the Shanghai Composite advances +1.5%. In Tokyo, the markets are closed for a holiday.

On Friday, the losing streak on Wall Street took a pause after US economic data turned out unexpectedly good. Thus, retail sales revenues increased in June and consumer sentiment improved somewhat in July, albeit starting from a historically low level. In addition, industrial sentiment in New York State surprisingly brightened in July. The Dow Jones Industrial gained +2.1% after five straight days of losses, narrowing the weekly loss to -0.2%. The S&P 500 advanced +1.9% and the technology index Nasdaq Composite posted a gain of +1.8%.

This week, the reporting season is gaining momentum which is likely to move stock markets. Today, more US investment banks will publish their quarterly figures. In the course of the week, Johnson & Johnson, Netflix, Tesla, Novartis and Roche, among others, will follow. 

In addition, investors focus on the European Central Bank (ECB) this week as monetary authorities will decide on the further monetary policy on Thursday. Analysts expect the ECB to raise interest rates for the first time in eleven years.

US retail sales rise

American consumers boosted retail spending by +1% in June as the Commerce Department reported on Friday. However, unlike other US economic figures, the retail data are not adjusted for inflation. That means rising consumer spending is at least partly reflecting higher prices of products and services. Annual inflation rose to +9.1% in June, the highest level in more than forty years. As a result, consumer confidence has fallen to a record low in recent weeks. The high demand for labor, on the other hand, is having a positive impact on private households, as wages have also risen in recent months. This should help to keep consumer spending stable for the time being, economists believe.

Citigroup exceeds expectations

Citigroup, the third largest US bank, has presented a surprisingly good second quarterly result. Although profits slumped by -27% year-on-year, the overall result was well above market expectations. Like other financial houses, Citigroup has also increased provisions for impending loan losses. The shares moved to the top of the S&P 500 on Friday, gaining more than +13%. Wells Fargo fared worse. The largest US mortgage lender missed expectations in the second quarter. On the one hand, higher reserves reduced profits. On the other hand, rising interest rates are weighing on the important mortgage business. However, the stocks benefited from the good market sentiment and gained about +6%, trailing Citigroup.

EU approves multi-billion subsidy for hydrogen industry

The path has been cleared for billions to be invested in the European hydrogen industry. EU regulators approved plans to fund such projects with up to EUR 5.4 billion, according to the EU Commission in Brussels. Thanks to the support, the Commission sees potential for EU companies to become leaders in the hydrogen industry.

Economic Indicators July 19

MEZ Country Indicator Last period
11:00 EZ Consumer price index (June, y/y) +8.6%
14:30 USA Building permits (June, m/m) -7.0%
14:30 USA New home starts (June, m/m) -14.4%


Earnings Calender July 18

Country Company Period
US Bank of America Q2
US Goldman Sachs Q2
FL Nordea Q2


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