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LGT Navigator: Markets count on Biden as guarantor of political stability and further stimulus measures

January 11, 2021

After Trump's readiness to hand over power, investors are hoping for a more stable political environment and a renewed expansion of economic stimulus in the US to overcome the corona crisis under the new leadership of the future Biden administration. Although the latest US labor market data disappointed expectations, the stock market indices in New York continued their record chase in part on Friday. In addition to the ubiquitous corona pandemic, the corporate reporting season, which begins at the end of the week, is now likely to move into the focus of investors.

Markets count on Biden as guarantor of political stability and further stimulus measures

In the stock markets, prices are being driven by hopes of further government aid and a possible expansion of monetary policy measures by central banks, as well as a successful vaccination campaign to contain Covid-19. The Dow Jones Industrial closed on Friday, after the recent record chase, with a moderate daily gain of +0.18% and entered the weekend at 31'097.97 points. In the first week of 2021, the American leading index thus recorded a gain of +1.6%. The market-wide S&P 500 rose at the same time by +0.55% to 3'824.68 points. Technology stocks were in particular demand and so the Nasdaq 100 rose by +1.28% to 13'105.20 points. In Asia, no consistent trend was apparent at the start of the week on the stock markets. In Japan, however, the stock market remained closed at the beginning of the week due to the holiday.

This week, the focus of the financial markets will be on the corporate reporting season, which begins on Friday. The starting signal will be the major banks JPMorgan and Citigroup with the figures for the final quarter of 2020. Furthermore, in Germany, the election of a new CDU chairman is coming into focus this week. Health Minister Jens Spahn denied to the Welt am Sonntag newspaper that he intends to run as the CDU/CSU's candidate for chancellor in the short-term. Friedrich Merz, Armin Laschet and Norbert Röttgen will therefore enter the race. The party conference begins on Friday.

Second impeachment trial against Trump in consideration

The Democrats, strengthened by the unexpected election victory in Georgia, could launch a new impeachment trial against President Donald Trump, who is still in office until January 20, in the US Congress in the next few days. As time is too short for impeachment proceedings, the aim is likely to be to send a signal after the violent storming of the US Parliament by Trump supporters and to hold the president accountable. Still today, however, Democrats in Congress want to take steps to impeach the US president who was voted out of office. According to the Speaker of the House of Representatives, Nancy Pelosi, a resolution should first be introduced calling on Vice President Mike Pence to take steps to impeach Trump within 24 hours. In a next step, the House of Representatives would initiate parliamentary impeachment proceedings against Trump. Whether such proceedings could continue after Trump's effective departure following the swearing-in of Democratic successor Joe Biden on January 20 remains unclear at this time. If Trump is indeed removed from office, he would likely not be able to run again in 2024.

Recovery on the US labor market remains fragile

The latest US labor market statistics at the end of last week showed how fragile the economic situation remains. After improving for seven months in a row, employment declined in December, weighed down by the corona crisis. Contrary to expectations, 140'000 jobs were shed at the end of last year. Economists had forecast an increase of 50'000 jobs. On the other hand, however, a total of 135'000 more jobs was created in the two preceding months than initially calculated. The unemployment rate, however, remained at 6.7% in December.

German export engine loses considerable power due to corona

Although German exports had gradually recovered from the corona-related slump in recent months, there are signs of a significant decline in 2020 as a whole. Although exports increased by +2.2% in November compared to the previous month, exports fell by -10.3% for the year as a whole in the first eleven months. The BGA industry association expects exports to decline by at least -12% for the year as a whole.



Economic Indicators January 11

MEZ Country Indicator Last
10:30 EZ Sentix Investor Confidence (January) -2.7

Earnings Calendar January 15

Country Corporate Period
US JPMorgan Chase Q4
US Citigroup  Q4
US Goldman Sachs Q4
US Alcoa


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US employment growth remains dynamic at the beginning of the year