After the recent highs on Wall Street, investors have taken profits at the end of the trading week and US stock markets closed with losses on Friday. The S&P 500 lost -0.5% to 4395.26 points and the Dow Jones Industrial declined -0.4% to 34’935.47 points. The Nasdaq 100 closed -0.6% lower at 14’959.90 points. Index futures again signal a friendly start for the first trading day in August.
After the roller coaster ride of last week, Asian stock markets are up on Monday. In Tokyo, the Nikkei gains +1.9% and the Hang Seng in Hong Kong advances +0.9%. The Shanghai Composite is +1.5% firmer. This is even though industrial activity in China in July has weakened more than expected. Thus, the Caixin/Markit Purchasing Managers' Index (PMI) for the manufacturing sector fell from 51.3 points in June to 50.3 points. While this means the PMI continues to signal an expansion in industrial activity, it is trading at its lowest level since April 2020. Analysts had only expected a decline to 51.1 points. China's economy has largely recovered from the corona pandemic. However, in recent months, shortages of raw materials have caused disruptions in supply chains and pushed up prices.
Americans spent more money again in June. Thus, private consumer spending increased by +1% month-on-month, as reported by the Commerce Department in Washington on Friday. Analysts had expected a plus of +0.7%. In May, a slight decline of -0.1% had resulted. Household incomes, however, hardly increased with +0.1%. Consumer behavior, which has a major impact on US economic performance, could quickly change again. Thus, the spread of the delta variant of the coronavirus could cause renewed restraint in the coming months. In addition, inflation remains high, as current data show: Consumer prices rose +4% year-on-year in June. Excluding energy and food prices, price inflation was +3.5%. The annual PCE inflation rate is the Fed's preferred measure for managing price stability. It aims for a target value of 2% on average over the economic cycle - so although inflation is currently above 2%, the longer observation period gives room for maneuver and means that the Fed does not have to adjust the monetary policy course. In recent months, the Federal Reserve has regularly emphasized that it considers the price increase to be temporary.
The European economy gained momentum in the spring and found its way out of recession. The gross domestic product grew by +2% from April to June compared to the previous quarter, the statistics office Eurostat announced on Friday after a first estimate. Analysts had expected growth of only +1.5%. In the final quarter of 2020 and in the first quarter of 2021, European economic output had contracted, economists speak in such a case of a technical recession. The four largest economies in the eurozone all grew in the second quarter. The Spanish economy grew by + 2.8% quarter-on-quarter, followed by Italy with + 2.7%. GDP growth was significantly weaker in Germany (+1.5%) and France (+0.9%).
The outlook for the Swiss economy remains favorable. Although the Kof economic barometer of the ETH Zurich fell for the second time in a row in July, it is still clearly above long-term average and thus signals a positive economic trend in the coming months. The leading indicator currently stands at 129.8 points, which is -3.5 lower than in the previous month. In May, it had reached a record level of 143.6 points. "The economy remains on a strong expansion course, although the high pace of recent months is unlikely to be sustained," commented the Kof. While the outlook for the hospitality and services sectors improved in July, the outlook for manufacturing clouded.
|03:45||China||HSBC purchasing manager index (July)||51.3|
|08:30||CH||Retail sales (y/y, June)||+2.8%|
|08:30||CH||Consumer price index (m/m, July)||+0.1%|
|10:00||EZ||Purchasing manager index (July)||63.4|
|16:00||US||ISM index (July)||66.1|
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.