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Rotations in favour of the "old economy"

On Wall Street, the Dow Jones Industrial benefited from a rotation out of technology stocks into "old economy" stocks at the start of the week and is now trading at levels last seen in late May. On the Nasdaq, profit-taking in the likes of Nvidia weighed on sentiment. Investors dumped big US tech stocks in favour of sectors such as banks and energy. Asia-Pacific markets were mostly higher on Tuesday. 

Alessandro Fezzi, LGT
Temps de lecture
5 minutes
NYSE building
© Shutterstock

The Dow Jones Industrial added to the previous week's gains on Monday to close up around 0.7% at 39,411.21. In contrast, the broad-based S&P 500 lost 0.3% to close at 5447.87. On the Nasdaq, indices were down around 1.1%. Nvidia shares fell almost 7% yesterday after hitting record highs in recent weeks. In recent days, the three major technology stocks Microsoft, Nvidia and Apple have been in a race to become the world's most valuable company. Microsoft is currently in the lead with a market capitalisation of just over USD 3.3 trillion.

The yield on ten-year US Treasuries is currently slightly lower at 4.23%. Meanwhile, on the currency front, the euro has strengthened slightly against the US dollar, trading at 1.0740.

Asian equity markets mostly higher

Most Asia-Pacific markets were higher on Tuesday. In Tokyo, the Nikkei 225 was up 0.5% and the broader Topix was up 1.4%. South Korea's Kospi gained 0.4%, while the small-cap Kosdaq gave up its gains and fell 0.5%. The Taiwan Weighted Index pared some losses and was last down 0.3%. In Hong Kong, the Hang Seng Index was up around 0.7%, while in mainland China the CSI 300 was up just under 0.2%. Australia's S&P/ASX 200 was up 0.9% today.

Signs of easing in EU tariff dispute with China boost car stocks

Despite a subdued start in Asia, sentiment on European stock markets was positive at the start of the week, with most indices posting gains. The EuroStoxx 50 was up just under 1%. However, the upcoming general elections in France and the UK are causing uncertainty. In addition, the battle for the White House in the US is gaining momentum as the two presidential candidates, Biden and Trump, face off for the first time in a televised debate at the end of the week. An initial rapprochement in the EU-China tariff dispute has been welcomed. Brussels accuses Beijing of unfairly subsidising battery-powered models and is threatening to impose tariffs on Chinese e-cars. The signs of easing tensions led to a 1.5% rise in the Europe 600 Automobiles & Parts.

German entrepreneurs more pessimistic

The latest edition of the Ifo business climate survey pointed to a gloomy mood in the German economy. The closely watched barometer fell to 88.6 points in June from 89.3 points in May, while economists had predicted an improvement to 89.6 points. Business sentiment in Germany had been trending upwards for several months. Previously, the monthly purchasing managers' survey had already signalled a deterioration in the business climate in the euro area. The Ifo Institute in Munich surveys around 9000 companies every month on their business situation and expectations. Just last week, the Ifo Institute raised its forecast for economic growth in Germany this year from 0.2% to 0.4%, citing rising household purchasing power. The Munich-based organisation concluded that the German economy is slowly working its way out of the crisis.  

Corporate and economic calendar

Corporate news in focus: FedEx quarterly results.

Economic data in focus: Spanish GDP, Canadian consumer prices, US S&P/CaseShiller house prices and consumer confidence.

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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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