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LGT Navigator: Hot technology stocks continue to let off steam

September 9, 2020

On the New York Stock Exchange, profit taking, particularly in the hotly contested technology stocks, provided a negative start to the week after the long Labor Day weekend. Meanwhile, in Europe, the deadlocked Brexit negotiations are once again weighing on investors' minds. Additionally, this morning the British pharmaceutical company AstraZeneca announced that it has stopped a clinical study for its corona vaccine as a precautionary measure after one of the test persons experienced health problems.

Hot technology stocks continue to let off steam

On Wall Street, profit taking in technology stocks continued after the long weekend. The Nasdaq 100 index closed -4.77% lower at 11 068.26 points. Last week, the tech index was still over 12 400 points, reaching new records almost daily. The Tesla share was also under pressure yesterday with a daily loss of -21%. The trigger was that General Motors wants to invest USD 2bn in the car concept company Nikola Corp. in order to push the “badger“ electric pick-up together. The correction in social media, internet, software and semiconductor stocks also pushed the Dow Jones Industrial down by -2.25% to a monthly low of 27 500.89 points. The market-wide S&P 500 posted a daily loss of around -3% and closed at 3 331.84 points. On Asia's stock markets, most indices followed the negative patterns from overseas. The MSCI AC Asia Pacific fell by almost -1%. For the start of trading in Europe, the futures market signals an opening not far from the levels of the previous evening.

Brexit-Poker: London increases pressure on Brussels

Even before the start of the new round of talks between Great Britain and the European Union, the government in London is trying to increase the pressure on Brussels. The British chief negotiator, David Frost, called for “more realism“ in the negotiations on the shape of relations after the Kingdom's withdrawal from the EU.  Meanwhile, the Financial Times reported that the British government was also partially questioning the already valid withdrawal agreement. If no agreement can be reached on the shape of future relations, experts say there could still be a “hard“ Brexit in early 2021.

Record collapse of the euro economy in the second quarter

According to revised data, gross domestic product in the euro zone fell by -11.8% quarter-on-quarter in the second quarter amid the corona crisis. This was the sharpest fall in economic output since the start of the data series in 1995. A first estimate had initially assumed an even sharper decline of -12.1%. Business investment in the period under review was down -17% on the previous quarter and private consumption fell by -12.4%. Spain, Italy, Portugal, Greece and France recorded the most severe economic slump, while Finland, Lithuania, Estonia and Ireland suffered the smallest slump.

German exports are recovering, but the pace is slowing down

German exports in July were still up +4.7% on the previous month. This means that the recovery following the collapse in the Corona crisis is continuing, albeit with significantly lower growth rates than in the previous months. In the previous month, exports had risen by almost +15% on a monthly basis. Imports rose by +1.1% in July, less than expected (consensus +3.5%). Compared to the previous year, however, exports are down -11% and imports are down -11.3% for the year as a whole.

 

 

Economic Indicators September 9

MEZ Country Indicator Last
08:30 FR Business Climate (August) 99.4

Earnings Calendar September 13

Country Corporate Period
US Oracle Q1

 

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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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