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US equity markets start the new week on a positive note

The US earnings season is set to gain momentum in the coming days. Investors are optimistic and are pushing Wall Street higher. Today, the focus will be on quarterly earnings from major US banks. 

Tina Haldner
Reading time
5 minutes
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US stock markets rose again on Monday, following strong gains in the previous week. The S&P 500 climbed 0.4% to 4522.79, its highest level since April 2022. The Dow Jones closed 0.2% firmer at 34’585.35, its highest level since December 2022, and the Nasdaq Composite gained 0.9% to 14’244.95. 

US markets were unimpressed by weaker-than-expected economic data from China, which had weighed on trading in Europe. The world's second largest economy is recovering less quickly than hoped from the severe restrictions imposed during the corona pandemic and grew more slowly than forecast in the second quarter. 

This week's events on Wall Street will be dominated by the earnings season, which should provide further momentum for equity markets. Quarterly reports from major US banks Bank of America, Morgan Stanley and Goldman Sachs, as well as tech giants Tesla and Netflix, are due in the coming days. 

Most Asian markets are showing losses on Tuesday. In Hong Kong, the Hang Seng Index is down around 2%, with property and technology stocks weighing on trading. The Shanghai Composite is trading 0.2% lower, while Japan's Nikkei is barely in positive territory.

Aside from Chinese economic data, macroeconomic news was light at the start of the week. Sentiment in New York State industrial sector deteriorated in July. The Empire State index fell to 1.1 points from 6.6 points in June, the Federal Reserve Bank of New York reported on Monday. However, on average, analysts had expected an even sharper decline to -3.5 points. At just above zero, the reading signals a slight increase in economic activity.

Inflation could turn out to be lower than previously expected in many regions of the world, according to a survey of around 1400 economists in 133 countries conducted by the Munich-based Ifo Institute. For the current year, the experts forecast an average inflation rate of 4.5% in North America, followed by 4.9% in Western Europe and 5.0% in East Asia, including China. These figures are 0.3 to 0.5 percentage points lower than three months ago. The differences within regions are quite substantial in some cases. Germany, for example, pulls up the European average with an estimated annual inflation rate of 5.8%. The forecasts also show that inflation rates are likely to remain well above pre-corona levels in the coming years.

Corporate news in focus: Novartis, Bank of America and Morgan Stanley report Q2 figures.

Economic data in focus: US retail sales (14:30), US industrial production (15:15).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

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