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LGT Navigator: Equity markets already resume rally – ECB in focus

April 22, 2021

After two weaker days driven by profit-taking, prices on the stock exchanges stabilized in midweek and already seem to be picking up where the previous rally left off. Companies that will benefit from an economic revival were particularly sought after. The focus is on the round of corporate results and today's interest rate decision by the European Central Bank, particularly on the following assessment of ECB head Lagarde.

Equity markets already resume rally – ECB in focus

After the recent profit-taking, prices on Wall Street and in Asia rose again. The Dow Jones Industrial closed with a solid daily gain of +0.93% at 34'137.31 points, only not far from the record high of 34'256 points reached only last Friday. The broad S&P 500 also gained nearly +1% to 4'173.42 points, and investors also picked up on the Nasdaq. The Nasdaq 100 went out with a plus of +0.91% at 13'935.15 points. Among the individual stocks, the shares of Netflix were in the spotlight. The streaming service had gained significantly fewer users than expected in the first quarter due to a lack of new movie and series hits and missed its own target as well as market expectations despite increased profit and revenue. As a result, the stock fell almost -9% at times and closed around -7% lower.

This afternoon at 13:45 (CET), the focus is clearly on the monetary policy announcement of the European Central Bank (ECB). While no adjustment of monetary policy is expected in the capital markets, the statements of ECB President Christine Lagarde should provide an indication of how the central bank assesses the economic situation as well as the outlook against the backdrop of the pandemic. Against the backdrop of the third corona wave in Europe, which could jeopardize or delay the anticipated economic recovery, as well as increased signs of rising inflation, investors will be eagerly watching the press conference at 14:30 (CET).

The focus continues also on the earnings season. Today, Credit Suisse is causing a stir, as the Swiss bank posted a net loss of CHF 252m in the first quarter. According to the bank, the collapse of the US hedge fund Archegos could also cause further losses in the second quarter. In the course of the day further important earnings will be published (see table below). 

Inflation rate in Canada doubled, central bank holds out prospect of earlier rate hike

Canada's consumer prices rose by +2.2% on an annual basis in March, which means that the inflation rate has smoothly doubled compared to the previous month. This was due to rising energy prices (+19% year-on-year) on the one hand and statistical effects due to the low basis for comparison in the prior-year period, when the corona pandemic depressed consumer prices, on the other. However, the Canadian central bank left its key interest rate unchanged yesterday at +0.25% for the time being. At the same time, however, the Bank of Canada announced that it will scale back its QE program, i.e. asset purchases, by a quarter and held out the prospect of an interest rate hike earlier than previously expected. The background is a faster and stronger than anticipated economic recovery. In its quarterly economic forecast, the Canadian central bank now expects GDP growth of +6.5% in the current year, more than two percentage points higher than before.

China attends Biden's climate summit

China's leader Xi Jinping plans to accept US President Joe Biden's invitation to officially attend the climate summit taking place today. The US government is hoping for commitments from the Chinese on climate protection. Some 40 heads of state and government have been invited to the summit. Last year, China pledged to strive for carbon dioxide neutrality before 2060, or to stop emitting carbon dioxide or to completely offset its CO2 emissions.



Economic Indicators April 22

MEZ Country Indicator Last
08:45 FR Economic Sentiment (April) 98.0
13:45 EZ ECB Monetary Policy Announcement
14:30 EZ ECB Press Conference
14:30 US Initial Jobless Claims (weekly) 576,000
14:30 US Chicago Fed National Activity Index (March) -1.09
16:00 EZ Consumer Confidence (April) -10.8
16:00 US Existing Home Sales (March, m/m) -6.6%
16:00 US Leading Indicator (March) +0.2%

Earnings Calender April 22

Country Corporate Period
SZ Credit Suisse Q1 
SZ Nestlé Q1 Sales
SZ Barry Callebaut Q1
FR Renault Q1 Sales
FR Vinci Q1 Sales
FR Vivendi Q1 Sales
FR Pernod Ricard Q1
SWE Volvo Q1 
UK Anglo American Q1
US Dow Q1
US Intel Q1
US Blackstone Q1


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