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LGT Navigator: Fed – stay the course or set the course?

April 28, 2021

The capital markets are eagerly awaiting a possible monetary policy decision by the US Federal Reserve this evening. Although the Fed is likely to leave key interest rates unchanged, it could be more confident in its outlook in view of the ongoing vaccination campaign and, against the backdrop of a further economic recovery and rising inflation, at least in the short-term, it could hint at subtle signs of a turnaround in monetary policy. The quarterly results of the tech giants are also currently in focus. Microsoft again presented strong figures yesterday and Alphabet benefited from a strong advertising business at Google. Today, the focus is on Apple and Facebook.

Fed – stay the course or set the course?

On the New York Stock Exchange, investors held back before the interest rate decision of the Fed. The Dow Jones Industrial closed virtually unchanged at 33'984.93 points (+0.01%) and the market-wide S&P 500 fell by -0.02% to 4'186.72 points. On the Nasdaq 100 technology exchange, prices fell more sharply and the Nasdaq 100 trades -0.47% lower at 13'960.28 points. In Asia, the trend of stock indices remained mostly friendly and for Europe's stock exchanges, the futures also signal a positive start to trading.

In addition to other results of stock market heavyweights such as Apple or Facebook, the directional decision of the US Federal Reserve (Fed) is undoubtedly the focus of interest today. Fed Chairman Jerome Powell could use the opportunity to prepare the financial markets for an interest rate turnaround, given an improved visibility in the economic outlook thanks to impulse successes. Another indication of stronger momentum in the US economy was provided by the S&P/Case-Shiller data published yesterday. For example, the index of house prices in the 20 largest metropolitan areas in the country rose in February by almost +12% year-on-year – the strongest growth in 15 years.

Microsoft again presents strong quarterly figures

The software giant benefited from increased adoption of its cloud computing services and pandemic-era sales growth in video games. Q3 revenue was up +19% to USD 41.7bn and net income was USD 15.5bn, beating market expectations. Nevertheless, the share price fell by around -3% in after-hours trading.

Google parent Alphabet with strong revenue growth and profit jump

Alphabet benefited in the past quarter from a strong advertising business at Google and increased total revenue for the year by a whopping +34% to USD 55.3bn. Profit increased by +6.8% to USD 17.9bn. At Google, revenues from the search engine business rose by +30% to just under USD 32bn. The share price rose at times by around +4% after the close of the stock market.

US consumer sentiment brightens significantly in April

Consumer confidence in the US brightened in April according to the latest survey results. The sentiment barometer of the New York-based Conference Board climbed more strongly than expected from 109.0 to 121.7 points. The index for the assessment of the current situation improved to 139.6 (previous month 110.1) and the indicator for expectations increased to 109.8 (108.3).

Biden raises minimum wage, partially fulfilling a campaign promise

US President Joe Biden announced an increase in the minimum hourly wage from the current level of just under USD 11 to USD 15. For the time being, the regulation only applies to employees of companies that carry out government contracts or provide services for the government. This allows Biden to partially fulfill another promise from his presidential campaign. However, a minimum wage of just USD 7.25 per hour still applies nationwide, although states can also set a higher minimum wage on their own. According to the White House, the increase in the minimum wage for work in the service of the government is to be cost-neutral for taxpayers and financed virtually via an anticipated increase in productivity. 

German exporters more optimistic than at any time since the beginning of 2011

According to a recent survey by the Munich-based economic research institute Ifo, the outlook for German industrial exporters improved again in April. The indicator of export expectations climbed from 23.8 points in the previous month to 24.6 points, the highest level since January 2011. In many countries, industry is hardly affected by the pandemic, which benefits demand for German export goods, Ifo commented.



Economic Indicators April 28

MEZ Country Indicator Last
08:00 GE Consumer Climate (May) -6.2
08:45 FR Consumer Sentiment (March) 94.0
16:00 EZ ECB President Lagarde Speech
20:00 US FOMC monetary policy announcement
20:30 US Press Conference Fed Governor Powell 

Earnings Calender April 28

Country Corporate Period
JP Sony Q1 
GE Deutsche Bank Q1 
GE Beiersdorf Q1
GE Puma Q1 
FR Sanofi Q1 
FR Scor
SP Banco Santander Q1
DK Carlsberg Q1
SWE Svenska Banken Q1
UK GlaxoSmithKline Q1
UK Lloyds Banking Q1
UK Reckitt Benckiser Q1
US Apple Q1
US Facebook Q1
US Ebay Q1
US Spotify Q1
US Ford Motor Q1
US Boeing


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Source: LGT Bank (Switzerland) Ltd.

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