The mood on US stock markets continues to be dominated by caution and markets turned mostly into the red at midweek. Thus, the S&P 500 lost -0.5% to 4402.66 points on Wednesday and the Dow Jones Industrial lost -0.9% to 34'792.67 points. The Nasdaq 100 held up slightly better, climbing +0.2% to 15’083.39 points. Labor market data from the private service provider ADP proved to be disappointing. They showed that job creation in the private sector slowed significantly in July. Investors now await the official monthly US labor market report, which will be published tomorrow.
The Asian stock exchanges are trading mixed on Thursday. In Tokyo, the Nikkei gains +0.4%. The Hang Seng fluctuates between gains and losses in Hong Kong, and the Shanghai Composite climbs +0.2%. Chinese online gaming stocks are again under pressure after state-affiliated media targeted the sector for the second time this week. According to the report, companies operating in this segment are to lose their preferential tax status and should be taxed the same as other sectors.
Business sentiment in the eurozone rose for the sixth month in a row in July, reaching its highest level in more than 15 years. The Markit Purchasing Managers' Index (PMI) climbed 0.7 points to 60.2, compared with the previous month, according to a second estimate released Wednesday by IHS Markit. The first estimate stood at 60.6 points. Analysts had expected a confirmation of the first survey. Thus, the PMI remains well above the growth threshold of 50 and signals an expansion of economic activity. The main contributor to the increase was the service sector, where business conditions improved after the relaxation of protective measures. Progress on vaccinations is also reviving activity in the service sector, with tourism, travel and hospitality industries benefiting in particular. In manufacturing, however, sentiment has dampened somewhat, but the index remains at a high level.
The Swiss Institute for Economics (Konjunkturfoschungsstelle, KOF) expects high economic growth in Switzerland even if the delta variant spreads. In its current forecast, the KOF expects coronavirus infections to rise earlier and faster than it assumed in its summer forecast. Even in this scenario, economic output should still increase by +3.8% in the current year, the economists expect. In its summer forecast, the KOF had anticipated a growth rate of +4%. In its analysis, it assumes that the vaccination rate will increase and that even a sharp rise in the number of cases will not trigger an overload of the healthcare system. The KOF's optimism is also reflected in the July business climate indicator. According to this, Swiss entrepreneurs are confident about the future and for the first time the mood is better than before the outbreak of the corona pandemic. The recovery is broad-based, as the business climate has improved in all sectors. However, while the industrial and retail sectors have largely recovered from the setback, the hospitality industry still assesses the situation as significantly worse than before the crisis.
|02:30||GE||Manufacturing orders (June)||-3.7%|
|10:00||EZ||ECB monthly report|
|13:00||UK||Interest rate decision BoE|
|14:30||US||Trade balance (June)||- USD 71.20bn|
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Source: LGT Bank (Switzerland) Ltd.
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