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LGT Navigator: Market sentiment remains fragile after recent turbulences

February 1, 2021

On the European stock exchanges and on Wall Street, a week of strong price fluctuations came to an end on Friday. In addition to the continuing uncertainties surrounding the pandemic development, speculative price turbulences in retail stocks in particular also caused volatility. At the beginning of the week and month, however, investors seem to have regained confidence. Market sentiment remains fragile though. Today, among other things, the focus is on the latest purchasing managers survey values, which will provide an indication of the economic trend in Europe and the US. In the course of the week, the corporate earnings season will pick up again.

Market sentiment remains fragile after recent turbulences

On the New York Stock Exchange, the ongoing market turmoil in shares of video game retailer Gamestop and cinema chain AMC Entertainment again brought prices under heavy pressure. The Dow Jones Industrial fell below the mark of 30'000 points and closed -2.03% lower at 29'982.62 points. Thus, the Dow recorded the strongest weekly loss since last October of -3.27%. The market-wide S&P 500 ended Friday's trading at 3'714.24 points, down -1.93% for the day. The Nasdaq 100 and Nasdaq Composite technology indexes also closed about -2% lower. At the beginning of the month, the latest purchasing managers' surveys should provide new indications of the economic trend on both sides of the Atlantic before the end of the week, the US labor market report will draw the focus. In the center of the action is also still the corporate eranings season, with Alphabet, Amazon and Pfizer on Tuesday, Merck, Gilead, Roche, ABB, Unilever or Royal Dutch Shell reporting on Thursday, and Sanofi and BNP on Friday.

In Asia, market sentiment has stabilized again somewhat to start the new week, with the MSCI index for Asia-Pacific equities outside Japan gaining +1.5% after the broad index had posted four consecutive losses. And also in Tokyo, the Nikkei 225 gains around +1.5%, after a decline of almost -2% on Friday. Latest data from China, however, were subdued. Thus, the latest purchasing managers' indices showed a clouding in the Chinese industrial sector in January. For Europe's stock markets, the futures also signal a positive start to the week. The political situation in Italy continues to take center stage. Matteo Renzi, head of the Italia Viva party, has reportedly brought former ECB President Mario Draghi into the conversation as the new head of government.

New vaccine candidate to relieve global campaign against Covid-19

The Covid-19 vaccine (NVX-CoV2373) developed by US pharmaceutical manufacturer Novavax has preliminary results of a Phase III study showing an efficacy of around 90%. In addition, the vaccine is also expected to be similarly effective against the mutation first discovered in the United Kingdom. However, efficacy against the South Africa mutation of the coronavirus appears to be only 60%. The UK regulatory authority immediately announced that it would review the vaccine.

US consumer confidence dims at start of year

According to the latest survey by the University of Michigan, consumer confidence in the US deteriorated more sharply in January than analysts had forecast. The consumer confidence barometer fell from 80.7 points in December to 79.0 points. Both expectations and the assessment of the current situation were assessed more negatively.

Final quarter of 2020 with little momentum

In Germany, France and Spain, the data presented on Friday on the development of gross domestic product showed only weak, or in the case of Spain, even negative momentum. The German economy grew by +0.1% quarter-on-quarter in the fourth quarter of last year (after +8.5% in Q3) and contracted by +3.9% over the year in view of the corona crisis. For the full year 2020, a GDP decline of -5.3% is reported. According to the Federal Statistical Office (Destatis), exports and construction investment supported the economy, while private consumption had a negative effect. France's economy contracted again in Q4 in the wake of the second wave of the pandemic. GDP in the second-largest euro economy fell by -1.3% quarter-on-quarter (after +18.5% in Q3) and by -5.0% year-on-year. By contrast, the Spanish economy grew in the final quarter of 2020 despite high levels of new Covid-19 infections. After a strong recovery in the summer, the eurozone's fourth-largest economy grew moderately by +0.4% month-on-month in Q4, but was down -9.1% year-on-year.

 

 

Economic Indicators February 1

MEZ Country Indicator Last
09:15 SP IHS Markit PMI Manufacturing (January) 51.0
09:30 SZ PMI Manufacturing (January) 58.0
09:45 IT IHS Markit PMI Manufacturing (January) 52.8
09:50 FR IHS Markit PMI Manufacturing (January) 51.5
09:55 GE IHS Markit PMI Manufacturing (January) 57.0
10:00 EZ IHS Markit PMI Manufacturing (January) 54.7
10:30 UK IHS Markit PMI Manufacturing (January) 52.9
11:00 EZ Unemployment Rate (December)  8.3%
15:45 US IHS Markit PMI Manufacturing (January) 59.1
16:00 US ISM PMI Manufacturing (January) 60.5

Earnings Calendar February 2

Country Corporate Period
UK BP Q4
US Alphabet Q4
US Amazon Q4
US Pfizer Q4
US Amgen Q4
US Exxon Mobil Q4
US UPS 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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