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Equity markets continue to enjoy a tailwind

Following the latest US employment data, many investors are betting that the Federal Reserve will cut interest rates soon. Expectations for the first easing have now shifted to September rather than November as previously thought. Asian markets extended their gains today and Wall Street was also buoyed by hopes of an easing of monetary policy. In Europe, positive economic data fuelled optimism and UBS beat market expectations with a billion-dollar first-quarter profit.

Alessandro Fezzi, LGT
Temps de lecture
5 minutes
Federal Reserve Monetary Policy
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UBS posted a billion-euro profit in the first quarter, beating consensus forecasts. The UBS Group earned USD 1.76 billion in the first three months, compared with analyst estimates of around USD 720 million. In particular, the Global Wealth Management and Investment Banking divisions improved their results significantly compared to the previous quarter. The bank said it was making progress in integrating Credit Suisse, which it acquired about a year ago.

Asia-Pacific stock markets extended their gains from the previous day on Tuesday. Meanwhile, the Reserve Bank of Australia kept its key interest rate unchanged at 4.35% for the fourth consecutive meeting. Australia's S&P/ASX 200 rose 1% after the decision, its fourth consecutive day of gains. In Tokyo, the Nikkei 225 resumed trading after a holiday and was also up 1%. South Korea's Kospi was also up 1.8% after a holiday, hitting a new monthly high. The small-cap Kosdaq was up 0.6%. Hong Kong's Hang Seng Index was up 0.3% today, while mainland China's CSI 300 was flat.

In New York, momentum continued thanks to hopes of an interest rate cut triggered by the latest labour market report. The Dow Jones Industrial gained just under 0.5% and ended Monday's trading at 38,852.27 points. At the top, Walt Disney shares gained 2.5%. The entertainment group will present its quarterly figures today. The broad-based S&P 500 rose by 1% to 5180.74 points. The indices on the Nasdaq technology exchange rose by around 1.1%. The Nasdaq 100 surpassed the 18,000 mark for the first time since mid-April, driven by chip stocks such as Nvidia (+3.8%), AMD (+3.4%) and Micron (+4.7%). The Chairman of the Federal Reserve in Richmond, Thomas Barkin, expressed confidence yesterday that inflation in the US would cool down towards the Fed's target of two per cent. Meanwhile, the yield on ten-year US government bonds remained just below the 4.5% mark.

Europe's stock markets opened the shortened week with slight gains, supported by slightly positive economic data. The EuroStoxx 50 closed on Monday with a daily gain of 0.7%. In the eurozone, sentiment among the companies regularly surveyed by S&P Global continued to brighten. The Purchasing Managers' Index improved from 50.3 points in the previous month to 51.7 in April, reaching its highest level since May 2023. S&P Global commented that the services sector in particular performed better, with price pressure increasing again. At the same time, the German financial market analysis company Sentix also published its monthly survey results on the assessment of analysts and institutional investors. According to the results, the economic outlook in the eurozone has continued to improve. The corresponding economic indicator rose for the seventh time in a row in May. This time by 2.3 points to minus 3.6 points, the best value since February 2022. However, the economic improvement is still only taking place at a moderate pace and the situation in Germany remains weak overall, explained Sentix.

According to a recent survey by the KOF Swiss Economic Institute at ETH Zurich, the business climate for Swiss companies has improved slightly. This was particularly the case in industry, although the situation remains difficult. Business was also better in the financial and insurance service providers and retail sectors. The quarterly KOF Business Situation Indicator for the Swiss private sector has risen for the third time in a row. The easing of inflation concerns also had a positive impact. Around 4500 companies were surveyed.

Corporate news in focus: Adecco, Geberit, OC Oerlikon, Siemens Healthineers, Infineon, Fresenius Medical Care, UniCredit, Ferrari, Walt Disney.

Economic data in focus: Germany exports and imports, Switzerland unemployment rate and Eurozone retail sales.

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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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