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LGT Navigator: Rally on US stock markets continues

June 23, 2021

In a statement before the US parliament, Federal Reserve Chairman Jerome Powell was once again relaxed with regard to the inflation trend. The rally on Wall Street continued and tech markets reached new record highs. Meanwhile, the EU Commission approved the recovery plans of Germany and Italy.

Federal Reserve

After the friendly start to the week, investors were eagerly awaiting the hearing of Fed Chairman Jerome Powell on Tuesday, who gave evidence on the Fed's corona policy before a committee of the US House of Representatives in the evening. Powell explained that inflation in the US had risen more than expected. However, he reiterated earlier statements that the price increase was likely to be transitory. In the text of his speech, which had already been published in advance, it was said that the US economy had continued to recover from the severe economic slump caused by the corona pandemic. However, the recovery was unsteady. 

On Wall Street, the recovery continued on Tuesday, with technology stocks hitting new record highs. The Nasdaq Composite gained +0.8% to close at 14’253.27 points. The S&P 500 advanced +0.5% to close at 4246.44, just below its all-time high. The Dow Jones gained +0.2% to 33’945.58 points. After the recent gains, the stock market value of the IT giant Microsoft reached more than USD 2 trillion for the first time. After Apple, Microsoft is the second US company to exceed this threshold. With a market capitalization of around USD 2.2 trillion, Apple currently leads the list of the most valuable listed companies. 

Billions in aid from Brussels

The EU Commission approved the recovery plans of Germany and Italy on Tuesday. The two countries can therefore soon expect to receive their first payments from the European recovery fund, provided the Council of EU States also approves. Germany has applied for a total of EUR 25.6 bn. Italy, which has been hit much harder by the corona pandemic, has submitted a program worth EUR 68.9 bn and will also have access to low-interest loans. The EU agreed last year to provide EUR 750 bn in funds to deal with the aftermath of the corona crisis. The disbursement of the funds is subject to certain conditions, which stipulate, among other things, that a significant portion of the planned investments flow into climate-friendly projects.

Weakness in bitcoin continues

Bitcoin's downtrend continued initially on Tuesday, with the value of the digital currency falling below USD 30’000 for the first time since January 2021. With the slide, bitcoin has given back all of its gains for the year after reaching a record high of almost USD 65’000 in April. In the course of trading, the most important digital currency recovered from the setback and finally recorded slight gains. The second largest cryptocurrency, Ethereum, also lost ground and fell temporarily almost 10% within 24 hours. The Chinese authorities' tough stance against cryptocurrencies is currently causing uncertainty. In recent weeks, they have stepped up their measures against crypto-mining and restricted business with digital currencies for Chinese financial service providers. As a result, the capitalization of the crypto market has literally collapsed and shrunk by around USD 500 billion within a week.


Economic Indicators June 23

MEZ Country Indicator Last period
02:30 JP Purchasing Managers' Index (June) 46.5
10:00 EZ Purchasing Managers' Index (June) 57.1
10:30 UK Purchasing Managers' Index (June) 62.9
15:45 US Purchasing Managers' Index (June) 68.7
16:00 US New home sales (m/m, May) -5.9%


Earnings Calender June 23

Country Company Period
UK GlaxoSmithKline Investor Day
NL ASML Investor Day
US Johnson & Johnson  ESG Investor Update


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Source: LGT Bank (Switzerland) Ltd.

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