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LGT Navigator: Equity markets switch to consolidation mode after record series

February 10, 2021

After the recent record-breaking run, the stock markets seem to have largely switched to consolidation mode in midweek and are waiting for the expectations that have now been priced in. The focus is on the planned USD 1.9 trillion corona stimulus package in the US and hopes for more Covid-19 vaccines, which promise to contain the pandemic. Meanwhile, in Washington, the Senate cleared the way for the second impeachment trial of former President Trump.

Equity markets switch to consolidation mode after record series

On the New York Stock Exchange, the indices trended directionless yesterday after the longest winning streak since August 2020. The Dow Jones Industrial closed virtually unchanged from the previous day at 31'375.83 points (-0.03%). The S&P 500 traded -0.11% lower at 3'911.23 points and the technology-heavy Nasdaq 100 ended Tuesday's session -0.06% lower for the day at 13'687.09 points. Meanwhile, in Asia this morning, the record series continued partly still, driven by positive corporate results of American values such as Twitter or Lyft, which had announced their quarterly reports after the close on Wall Street. The MSCI index for Asian shares (excluding Japan) surpassed its January high and reached a new record level. The indices on the Chinese mainland made particularly strong gains. For example, the CSI300 rose by around +1.3% to a 13-year high and the Shanghai Composite reached a five-year high on the last trading day before the week-long New Year holiday.

No price pressure yet visible in China's economy

In China, the latest data on consumer and producer prices showed no consistent picture. While producer prices increased for the first time in a year, consumer prices surprisingly declined. Against the backdrop of the corona constraints, consumer prices fell by -0.3% year-on-year in January, according to the statistics office in Beijing. Analysts had expected stagnation. In December, consumer prices had still risen slightly. At the same time, producer prices at the beginning of the year increased for the first time in a year by +0.3% year-on-year, after they had fallen by -0.4% in December. Rising oil prices in particular made production more expensive.

US Senate gives green light for second impeachment trial against Trump

The Senate in Washington yesterday cleared the way for a second impeachment trial against former President Donald Trump. In a vote, the procedure was deemed constitutional by a majority. In the process, six Republican senators voted in favor with the 50 Democratic senators. This means that Trump's impeachment lawyers and defenders can now present their arguments starting today. At the center of this is the attack by Trump supporters on the Capitol on January 6. Democrats accuse Trump of “incitement of insurrection.“ Ultimately, however, a conviction of Trump is unlikely, at least as things stand, as 17 Republicans would have to join 50 Democratic senators in condemning the former president.

OECD leading indicator points to further economic recovery

The leading indicator of the Organization for Economic Cooperation and Development (OECD) signals a continued recovery in most major economies from the corona shock with an increase of +0.13% to 99.6 points. According to the OECD, the leading indicator is designed to show economic turning points relative to the trend six to nine months ahead. The leading indicator for China improved the most (+0.3%), followed by the US (+0.21%). The indicator for the euro area remained practically unchanged versus the previous month at +0.09% at 98.9 points.

Corona crisis caused sharp drop in German exports in 2020

Germany's exports fell by -9.3% last year compared to 2019 to EUR 1'204.7bn against the backdrop of supply chains disrupted by the corona pandemic, according to the Federal Statistical Office in Wiesbaden. This is the sharpest drop since the financial crisis in 2009. Imports decreased by -7.1% year-on-year to EUR 1'025.6bn in 2020. In the current year, increased demand from China in particular should now support the German export industry. The export expectations calculated by the Munich Economic Research Institute improved significantly at the beginning of the year.

 

Economic Indicators February 10

MEZ Country Indicator Last
08:00 GE Consumer Prices (January, y/y) +1.4%
08:45 FR Industrial Production (December, m/m) -0.9%
14:30 US Consumer Prices (January, m/m) +0.4%
14:30 US Consumer Prices (January, y/y) +1.4%
14:30 US Core Consumer Prices (January, y/y) +1.6%

Earnings Calendar February 10

Country Corporate Period
NL Heineken Q4
DK Vestas Q4
US Coca-Cola Q4
US General Motors Q4

 

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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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