The European stock markets continued their upward trend in the second half of the week. In Switzerland, the SMI gained +2.2% on Thursday and closed above 9900 points for the first time since the end of April. In Germany, the Dax rose +1.1% and approached the 12,000 point mark. The EuroStoxx 50 advanced +1.4%. The prospect of a further aid package boosted market sentiment. French Finance Minister Bruno Le Maire wants to speed up negotiations on the planned European recovery fund. He hopes there will be agreement on the details as early as next week, Le Maire said. The fund volume is to amount to EUR 750 bn, whereby two thirds of the money to be distributed would not have to be paid back. All EU members must agree to the plan, but four states have already announced their opposition.
By contrast, the stock markets in the US and Asia have run out of steam. American stock markets regained some initial gains in Thursday's trading, with the S&P 500 closing -0.2% lower. The Nikkei, the leading index in Tokyo, also fell today (-0.2%), as did the Hang Seng Index in Hong Kong (-0.6%).
Since the year's low in March, stock markets around the world have rallied strongly, spurred by massive cash injections from governments and central banks. But despite the recent recovery, strategists assume that stock markets are heading for the worst stock market year in ten years, according to a Reuters survey. Based on the survey, most of the leading indices are likely to perform as badly as they did during the financial crisis of 2008. However, 70% of the analysts expect that markets will not fall below the March low.
Meanwhile, no improvement is in sight on the economic front. US economic output fell at a -5% annual rate in the first quarter, the Commerce Department announced, revising an initial estimate (-4.8%). This is the sharpest decline since the recession following the financial crisis. The worst is yet to come: Economists expect economic output to slump by around 30% annualized in the second quarter, followed by -15% in the third quarter, according to a survey by data service provider FactSet. In addition, more than two million people in the US have filed jobless claims last week. Since March 21, the initial applications have totaled around 40 million. Although the figures have fallen steadily in recent weeks, the situation on the labour market remains dramatic: in April alone, more than 20 million jobs were lost, putting an abrupt end to the American job boom. The labour market data for May will be published on 5 June.
The Swiss tourism industry needs to prepare itself for a miserable summer, after hotel beds already remained empty for the past two months. The Economic Research Institute of the ETH Zurich (Kof) is forecasting -37% fewer overnight stays than last summer. Although the population is likely to take more holidays within the country due to travel restrictions, this will not compensate for the absence of foreign guests, the Kof notes. In particular, cities and hotels specialising in Asian travellers must expect a massive slump. The Alpine regions and Ticino should fare somewhat better. There are no signs of a rapid recovery: the Kof expects the number of overnight stays to return to pre-crisis levels only in 2022 – a wave of layoffs and bankruptcies is likely to be the result.
Economic confidence in the euro zone improved somewhat in May, but the index remains far below the long-term average and has recovered only slightly from the crash of the previous months. A country comparison shows a mixed picture: While the mood in Germany and the Netherlands has improved overall, the index has reached a new all-time low in France. Analysts therefore expect economic output in the euro zone to fall sharply again in the second quarter, after already shrinking by 3.8% in the first quarter.
|08:45||FR||Gross domestic product Q1 (q/q)||-5.8%|
|11:00||EZ||Consumer price index (y/y)||0.9%|
|14:30||US||PCE price index (y/y)||1.7%|
|14:30||US||Personal expenses (m/m)||-7.5%|
|15:45||US||Chicago purchase manager index||35.4|
|16:00||US||Uni Michigan consumer confidence||73.7|
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: David Wolf, +41 44 250 83 48, E-Mail: email@example.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.