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LGT Navigator: US stock markets rise to new highs

February 5, 2021

Good macro data pushed US stock markets to new highs on Thursday. The focus today lies on the American labor market figures. Analysts expect that the US economy has created new jobs in January. The economic forecast for Switzerland, however, has been revised downward.

Wall Street

Wall Street closed at new highs on Thursday after positive economic data were published during the day. The S&P 500 climbed +1.1% to 3'871.74 points and the Nasdaq Composite advanced +1.2% to 13'777.74 points. The Dow Jones Industrial rose +1.1% to 31'055.86 points, just below the previous high. Corporate results also support the positive sentiment. On Wall Street, the earnings season is in full swing. Of the 500 S&P 500 companies, 184 have so far presented their results, with around 84% exceeding analysts' expectations.

Asian markets are also on the rise on Friday. In Tokyo, the Nikkei gains +1.5%, in Hong Kong, the Hang Seng is up +0.7% and the Shanghai Composite gains +0.4%. 

US labor market in focus

In the US, the number of initial jobless claims has fallen. Thus, in the week ending January 30, 779'000 Americans filed for unemployment for the first time, according to the U.S. Department of Labor on Thursday. This is the third week in a row that the numbers have fallen, analysts had expected an increase. The focus today will be on the labor market report, which will be released at 2:30 p.m. Swiss time. Market observers expect the economy to have created 50'000 new jobs in January, after losing 140'000 jobs in December. The unemployment rate is expected to remain unchanged at 6.7%.

British central bank confirms interest rate policy

The Bank of England confirmed its monetary policy course on Thursday. The key interest rate remains at 0.1% and bond purchases will continue, the British central bank announced. The BoE referred to the more uncertain economic situation, in which Great Britain finds itself since the outbreak of the corona pandemic. They also stated that they would continue to loosen monetary policy should the situation worsen.

Economic forecast for Switzerland revised downward

The Swiss economy is likely to recover more slowly than expected in 2021. The Swiss Institute of Economic Research at ETH Zurich (KOF) has lowered its forecast for economic growth from 3.2% to 2.1%. The KOF points to the second lockdown, which is dampening economic activity as, for example, stores have to remain closed. But the emergence of various virus mutations and the slow start to the vaccination campaign are also likely to continue to weigh on the economy into the second quarter, the economists expect. The KOF forecasts that the Swiss economy will not return to pre-crisis levels until the end of 2021. 

Consumer sentiment clouds over

Consumer sentiment in Switzerland has also clouded over at the start of the year. The corresponding index, which is surveyed on a quarterly basis, stood at -14.6 points in January and was thus lower than in October (-12.8). Although the index has recovered from its record low during the corona crisis (-39.3 points in April), it is still well below the long-term average of -5 points. In particular, consumers are more pessimistic about the outlook for the economic development, the Seco reported on Thursday. In addition, concerns about job security as well as budget planning has increased, the Seco reported.

Sluggish holiday season in European retail

European retailers earned more in December than in the previous month, but the Christmas business was less successful than hoped. Thus, sales increased by +2%, after shrinking by -5.7% in November. Analysts had forecast an increase of +2.8%. The differences in the individual euro countries are quite significant. German retailers, for example, have earned almost -10% less as stores remained closed in the second half of December. By contrast, the retail sector in France achieved a sales increase of +22.3%.

 

 

Economic Indicators February 5

MEZ Country Indicator Last
00:30 JP Private spending (y/y, December) +1.1%
08:00 GER Order intake manufacturing +2.3%
14:30 US Non-farm payrolls (January) -140'000

Earnings Calendar February 5

Country Corporate Period
FR BNP Paribas Q4
FR Sanofi Q4
DE Linde Q4
US Estée Lauder Companies Q3

 

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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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US employment growth remains dynamic at the beginning of the year