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LGT Navigator: Economic and inflation worries cast shadows on so far solid reporting season

October 27, 2021

Driven by a strong reporting season so far and the prospect of further positive impetus from corporate results, Wall Street is holding steady on a record path. General Electric and 3M, for example, were convincing, as was Microsoft after market close. While the blue-chip quarterly financial statements will remain the focus of attention in the course of this week, investors are now turning their attention to the upcoming monetary policy decisions of the European and Japanese central banks against the backdrop of ongoing economic and inflation concerns.

Economic and inflation worries cast shadows on so far solid reporting season

On the New York Stock Exchange, blue chips continued their rally and climbed to new record levels. The Dow Jones Industrial scratched in the meantime at the 35,900 mark, but then lost momentum and went out of the day almost unchanged from the previous day at 35,756.88 points (+0.04%). The S&P 500 gained +0.18% to 4'574.79 points. Also, on the Nasdaq technology exchange, the indices could not bring their gains above the closing line and closed almost unchanged from the previous day.

While Tesla reached a market capitalization of more than one trillion US dollars, the Microsoft reported record results. In the first quarter, the software group posted a profit of USD 20.51 billion, or USD 2.71 per share, earning significantly more than analysts expected (EPS consensus USD 2.08). On the one hand, the strong profit was also due to a tax effect, but on the other hand also to an extremely strong cloud business.

In Asia, most stock indices trended in negative territory today, dominated by economic, inflation and pandemic concerns.

American consumers surprisingly more optimistic

Consumer confidence in the United States unexpectedly brightened strongly in October. As reported by the New York research institute Conference Board, the monthly consumer sentiment index improved from 109.8 points in September to 113.8 points in October. Economists, on the other hand, had expected a further decline to 108.0 points. In the survey, both the assessment of the current situation and the outlook improved.

Slight decline in house prices in the US

Price growth on the US housing market suffered a slight setback in August. According to the S&P/Case-Shiller index, house prices in the 20 largest cities in the USA rose by an average of +19.7% over the year, slightly less than the +20% recorded in July. This was the first time since June 2020 that the rate of increase was slightly lower than in the previous month. Compared with the previous month, prices rose by +1.2% on average (consensus +1.5%, previous month +1.4%).

German government cuts growth forecast for 2021

In its fall projection, the German government sharply lowered its GDP forecast for the current year from +3.5% (April forecast) to +2.6%. The background to this is unsurprisingly the global supply bottlenecks. On the other hand, Berlin expects stronger economic growth of +4.1% next year, compared with the previously anticipated +3.6%.

Outlook for German exporters worsens according to Ifo

In October, the export outlook in Germany deteriorated compared to the previous month, reaching the lowest level since February this year, according to the Munich-based economic research institute Ifo. The corresponding barometer fell from 20.5 points in September to 13.0 points. The Ifo Institute commented that the mood of the export industry had been significantly dampened in view of the supply problems.

Economic Indicators October 27

MEZ Country Indicator Last period
08:00 GE GfK Consumer Climate (November) +0.3
08:45 FR Consumer Confidence (October) 102.0
14:30 US Durable Goods Orders (September, m/m) +1.8%


Earnings Calender October 27

Country Company Period
SZ Sulzer M9 Sales
GE Deutsche Bank Q3 
FR Schneider Electric Q3
FR Scor Q3
IT Telecom Italia Q3
SP Banco Santander Q3
SP Iberdrola Q3
NL Heineken Q3
UK GlaxoSmithKline Q3
US Bristol Myers Squibb Q3
US McDonald's Q3
US Coca-Cola Q3
US Spotify Q3
US Amgen Q3
US Ebay Q3
US Ford Motor Q3
US General Motors Q3


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Source: LGT Bank (Switzerland) Ltd.

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