China's economy is on the road to recovery. Compared with the same period of the previous year, economic activity grew by +3.2% in the second quarter, with analysts forecasting a plus of -2.6%. From January to March, gross domestic product had contracted by 6.8%. In January, the government imposed a nationwide lockdown to get the virus under control, which probably has started in the Chinese city of Wuhan. However, it remains to be seen how sustainable the upswing is: industrial production in particular has recovered, while domestic demand remains weak.
The European Central Bank (ECB) will decide today on the future monetary policy in the euro zone. For the first time since the outbreak of the pandemic, market strategists do not expect any further monetary policy easing. In the past four months, the central bank has adopted several extensive measures to secure liquidity in the European financial system. These include the PEPP (Pandemic Emergency Purchase Programme), which was launched in March and now amounts to EUR 1.35 bn. The interest rate decision will be published at 1:45 p.m., and ECB President Christine Lagarde will appear before the press at 2:30 p.m.
On the corporate side, the focus was on Goldman Sachs. The US investment bank published unexpectedly good quarterly figures and was able to keep profits stable compared to the previous year. Goldman Sachs benefited from high trading volumes during the market turbulences: The securities business almost doubled between April and June and contributed almost three quarters of quarterly turnover. In addition, the major bank has prepared itself for the consequences of the pandemic and has set aside almost USD 1.6 bn for potential credit losses. Goldman Sachs thus performed significantly better than its rivals JPMorgan Chase and Citigroup, who presented their results on Tuesday. Although they also beat market expectations, both financial institutions posted a significant drop in profits.
The American biotech company Moderna has published promising study results on its potential corona vaccine. A high level of antibodies was detected in trial participants after treatment. In March, Moderna was the first company to start a clinical study on its Covid-19 vaccine. The US government has provided almost half a billion dollars to support the project. Now, at the end of July, Moderna plans to start the critical clinical trial in the US, in which 30 000 persons will participate. The US pharmaceutical company Pfizer and the Mainz-based enterprise Biontech, which caused euphoria on stock markets at the beginning of the week with a potential vaccine, also want to start a large test series this month.
In the UK, inflation rose surprisingly in June. Price growth amounted to 0.6%, compared with 0.5% in May. Analysts had expected a decline in inflation. The inflation rate thus remains well below the 2% target set by the Bank of England. The United Kingdom is one of the countries most affected by the pandemic: In April, economic output slumped by more than 20%. The economy is only slowly regaining momentum.
|04:00||CHN||Gross domestic product (Q2)||-6.8%|
|04:00||CHN||Industrial production (June)||4.4%|
|13:45||EZ||ECB interest rate decision|
|14:30||US||Retail sales (June)||17.7%|
|14:30||US||Initial jobless claims (weekly)||1.3m|
|14:30||US||Philly Fed Index||27.5|
|US||Bank of America||Q2|
|US||Johnson & Johnson||Q2|
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