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LGT Navigator: Nutrient for stock markets

March 29, 2021

Positive economic data from the US and Germany, Biden's plans for an infrastructure program, hopes for a faster progressing Covid-19 vaccination campaign and the end of the blockade in the Suez Canal should ensure a positive start to the week on the stock exchanges.

Nutrient for stock markets

In Asia, most stock indices followed the positive guidance from overseas on Monday and recorded at least moderate gains at the start of the week. On the New York Stock Exchange, the indices had made strong gains after a mixed week on Friday. The Dow Jones Industrial closed +1.39% higher at 33'072.88 points, which puts the leading index only slightly below the record of 33'227 points set a few days earlier. The market-wide S&P 500 went out at the end of last week with a daily gain of +1.66% at 3'974.54 points and the tech index Nasdaq 100 rose after the moderate losses of the previous day by +1.55% to 12'979.12 points.

Positive factors included solid American consumer confidence and US President Joe Biden's plans for an infrastructure program. Biden is expected this week to present his plans for infrastructure spending, which could again strengthen the recovery of the US economy from the corona crisis. However, the prospect of stronger economic growth has again spurred speculation that inflation will rise faster, weighing on government bond prices. As a result, the yield on ten-year US Treasuries was quoted at 1.66% at the beginning of the week, only close to the recently reached 13-month high of 1.754%. A positive impetus should also provide the successful release of the container freighter in the Suez Canal, which cleared the way for smooth global trade again and for a decline in oil prices.

Corona aid packages and advancing vaccinations lift Americans' spirits

The latest survey results from the University of Michigan showed a more confident assessment of households surveyed. The sentiment indicator climbed by 8.1 points to 84.9 in March, reaching its highest level in a year. Both the assessment of the current situation (March 79.7 after 70.7 in February) and the outlook (91.5 after 86.2) improved. Consumers' inflation expectations on a twelve-month horizon declined from 3.3% to 3.1% compared with the previous month. On a five-year horizon, they increased from 2.7% to 2.8%.

German companies in good mood despite ongoing corona crisis, according to Ifo

In Germany, the mood of companies surveyed by the Munich-based economic research institute Ifo brightened considerably in March thanks to a resumption of largely flourishing global trade. In the process, Germany's most widely followed economic barometer climbed from 92.7 points in February to 96.6, its highest level since June 2019. The German economy is starting the spring on a confident note despite rising Covid-19 infection figures, and optimism looking ahead to the coming months has returned, Ifo President Clemens Fuest commented. The Ifo survey is based on around 9'000 companies on their assessments of the current situation as well as the outlook for the coming months.

In Italy, too, business sentiment improved in March. The business climate barometer compiled monthly by the Istat statistics office in Rome rose from 93.3 to 93.9 points. While firms are more confident, renewed lockdowns are weighing on consumer confidence. The consumer sentiment indicator dipped to 100.9 points from 101.4 in the previous month.

Spain's economy manages slight growth in final quarter of 2020

In Spain, statistics agency INE reported growth of +0.4% in the fourth quarter of last year. Like virtually all European economies, the Spanish economy lost massive momentum after the stellar recovery in the third quarter (+16.4%) in the face of the re-expanded restrictions on public life. The severity of the corona dip is also shown by a year-on-year comparison of economic output. On an annual basis, Spanish GDP fell by just under -9% in Q4 2020.


Economic Indicators March 29

MEZ Country Indicator Last
10:00 EZ Business Climate (March) -0.14
10:00 GE Joint Economic Forecast Ifo, Istat, and KOF

Earnings Calendr March 30

Country Corporate Period
GE BioNTech Q4
FR Total  Outlook & Strategy
CAN Blackberry Q4


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