Skip navigation Scroll to top
Scroll to top

LGT Navigator: Investors remain cautious after strong earnings

February 4, 2021

The stong earnings of Alphabet and Amazon failed to give stock markets a strong boost. In Italy, former ECB chief Mario Draghi is set to form a new government. Consumer prices in the eurozone rise at the start of the year for the first time since the outbreak of the corona pandemic.

Wall Street

The strong earnings of the US tech giants Alphabet and Amazon were not able to give stock markets a sustained momentum on Wednesday. Although the technology index Nasdaq Composite initially took aim at a new record, the gains quickly crumbled and the barometer closed little changed from the previous day. The S&P 500 climbed for the third day in a row and closed +0.1% firmer, the Dow Jones Industrial also rose +0.1%. 

After record sales in the final quarter, the shares of Google parent Alphabet were in demand and increased by +7.3%. In contrast, the shares of Amazon declined (-2%), although the world's largest online retailer can look back on an extremely successful business quarter. The group has announced on Wednesday surprisingly a change at the top of the group. Thus, Amazon founder Jeff Bezos will retire as CEO.

In Asia, stock markets are trading with losses on Thursday. In Tokyo, the Nikkei loses more than -1% and in Hong Kong, the Hang Seng declines about -1.1%. The Shanghai stock exchange trades -0.6% weaker.

Draghi to the rescue

In Italy, a well-known face is taking on the task of forming a new government. On Wednesday, Italian President Sergio Mattaralla appointed Mario Draghi, the former head of the European Central Bank, to put together a cabinet of experts. Earlier, talks to save the current governing coalition of the Five Star Movement and the Partito Democratico had failed. Prime Minister Giuseppe Conte, who has no party affiliation, submitted his resignation on Jan. 26 after the alliance broke apart. Draghi faces the difficult task of forming a government capable of securing a majority. The strongest force in parliament, the Five Star Movement, has already ruled out working with him. The former ECB president knows his way around crises: during his tenure, the eurozone experienced its most severe turbulence to date. In July 2012, at the height of the euro crisis, Draghi promised to do everything he could to save the euro – ”whatever it takes“ were the words Draghi used to calm financial markets at the time. Now the 73-year-old native of Rome is expected to pave the way to lead Italy out of the economic crisis that was triggered by the corona pandemic.

Prices in the eurozone rise again

The annual inflation rate in the eurozone climbed in January to the highest level since the outbreak of the corona crisis. According to the statistics authority Eurostat, the inflation rate rose to +0.9% after consumer prices fell in the past five months. The reason for falling prices was the economic slump after the corona shock as well as low energy prices. The European Central Bank (ECB) is aiming for an annual inflation rate of just under 2% in the medium-term, but has been missing this target for years.

US service providers more optimistic

Sentiment in the US service sector has brightened surprisingly at the start of the year. The ISM index for the service industry rose to 58.7 points in January and improved by 1 point month-on-month. Analysts had expected a decline, as the industry is suffering particularly from the measures taken to contain the coronavirus. The development is also surprising because the outlook for the industrial sector, which is less affected by the corona restrictions, has clouded over the same period, as shown by the ISM manufacturing index at the start of the week.

 

 

Economic Indicators February 4

MEZ Country Indicator Last
07:45 CH Seco Consumption Indicator (Q1) -30.0
10:00 EZ ECB Monthly Bulletin
11:00 EZ Retail Sales (m/m, December) -6.1%
13:00 GB BoE Interest Rate Decision
14:30 US Initial Jobless Claims 847'000

Earnings Calendar February 4

Country Corporate Period
CH ABB Q4
CH Roche Q4
CH Swisscom Q4
GER Deutsche Bank Q3
GER Merck Co. Q4
US Bristol-Myers Squibb Q4
US Ford Motors Q4
US Gilead Sciences Q4
US Philip Morris Q4

 

LGT helps you make informed investment decisions

All about global economic and market trends at a glance

Subscribe to LGT's research newsletters

You can also follow us on Facebook or LinkedIn – or visit MAG/NET and discover interesting background articles. If you have questions, a consultant from the bank will be happy to help you.

Imprint
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.

Risk Disclosure (Disclaimer)
This publication is an advertising material / marketing communication. This publication is for your information only and is not intended as an offer, solicitation of an offer, or public advertisement to buy or sell any investment or other specific product. Its content has been prepared by our staff and is based on sources of information we consider to be reliable. However, we cannot provide any confirmation or guarantee as to its being correct, complete and up to date. The circumstances and principles to which the information contained in this publication relates may change at any time. Information that has been published should therefore not be understood as implying that no change has taken place since its publication or that it is still up to date. The information in this publication does not constitute an aid for decision-making in relation to financial, legal, tax-related or other consulting matters, nor should any investment decisions or other decisions be made on the basis of this information alone. It is recommended that advice be obtained from a qualified expert. Investors should be aware that the value of investments can fall as well as rise. Positive performance in the past is therefore no guarantee of positive performance in the future. Investments in foreign currencies are also subject to fluctuations in exchange rates. We disclaim all liability for any loss or damage of any kind, whether direct, indirect or consequential, which may be incurred through the use of this publication. This publication is not intended for persons subject to legislation that prohibits its distribution or makes its distribution contingent upon an approval. Any person coming into possession of this publication shall therefore be obliged to find out about any restrictions that may apply and to comply with them. In line with internal guidelines, persons responsible for compiling this report are free to buy hold and sell the securities referred to in this report.

US employment growth remains dynamic at the beginning of the year