Markets Udpate Monday 21/06/2021 – The Green Mine

Frankfurt – 21/06/2021

The Green Mine

Investors’ eyes are once again on Jerome Powell this week, who will be heard by parts of the US Congress this Tuesday. At issue is the Federal Reserve’s response to the corona crisis. Powell’s remarks are likely to be closely scrutinised for clues about future monetary policy.

While investors are puzzling over the Fed’s course, they can save themselves the trouble with the ECB. Despite the recent increase in inflation risks in Europe, there is no sign of an end to the ultra-loose monetary policy. It is important to remain vigilant, even if the outlook is “indeed” brightening because of the improved corona situation, Lagarde told a European Parliament committee in a video link-up on Monday. She said that monetary policy support would have to play a bridging role well into the economic recovery phase. Lagarde once again made clear that the ECB sees the recent rise in inflation as temporary.

US Markets at a glance

The US stock markets on Wall Street rose strongly on Monday.

The Dow Jones opened with a minimal gain and increased this significantly in the further course of trading. In the end, the US index climbed by 1.76 per cent to 33,876.65 points. The NASDAQ Composite index also started with a small gain and subsequently extended this. By the closing bell, it was up 0.79 per cent at 14,141.48 points.

The market is still focused on the development of interest rates and the statements of the Federal Reserve. At the same time, experts assume that investors should prepare for continued volatility.

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There was not one loser among the 30 individual stocks in the Dow Jones; the day’s winner was the credit card giant American Express shares. Higher interest rates would be a tailwind for financial stocks, as they increase margins and thus profits.

Far East Markets at a glance

The stock exchanges and indices in the Far East were in the red on Monday. In Tokyo, the Japanese benchmark index Nikkei ultimately lost 3.29 per cent to 28,010.93 points. The Shanghai Composite on the Chinese mainland was 0.12 per cent firmer at 3,529.18 points at the end of trading. Meanwhile, the Hang Seng fell 1.08 per cent to 28,489.00 points in Hong Kong.

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Fears are spreading that another corona wave is imminent given the spreading delta variant of the virus. In addition, concerns that the US Federal Reserve might tighten monetary policy sooner than expected weighed on the Asian stock markets. The president of the regional Fed in St. Louis, James Bullard, spoke before the weekend that the inflation trend might require an interest rate hike as early as the end of 2022, which caused profit-taking in Europe and the USA on Friday.

European Markets at a glance

The European stock markets were friendly on today’s trading day. The EuroSTOXX 50 opened the day slightly lower but climbed into the profit zone intraday and closed 0.71 per cent higher at 4,112.33 points.

The German benchmark index also managed to jump into positive territory at the start of the week. The DAX opened the session slightly lower and initially slipped deeper into the red. However, it was then able to recoup its losses and posted substantial gains. It ultimately ended the trading session 1 per cent higher at 15,603.24 points. The TecDAX moved in red terrain in trading after already starting somewhat weaker. It closed down 0.09 per cent at 3,486.12 points.

Despite the apparent spread of the delta variant of the coronavirus, investors on the European stock markets were optimistic. After the US Fed had already become significantly more hawkish last week, the Bank of England is moving into the focus of market participants this week.

Forex, gold, oil and crypto

The euro recovered somewhat on Monday from its heavy losses in the forex market last week. The euro was boosted at the start of the week by a generally friendly mood on the financial markets. Fears of a tighter monetary policy in the USA weakened noticeably, and the dollar, the world’s reserve currency, lost some of its value. The euro exchange rate had risen above 1.19 US dollars again in European trading and reached a daily high of 1.1921 dollars in US trading. At the close of trading, the euro was still quoted at 1.1915 dollars.

Oil prices rose on Monday. Market observers pointed to a generally friendly mood on the financial markets and the recent price development on the foreign exchange market. Oil prices were boosted in the afternoon by a slight weakening of the US dollar. North Sea Brent cost 1.20 more at 74.71 US dollars in the evening. The barrel price of West Texas Intermediate light oil rose by a whopping 1.73 dollars to 73.37 dollars.

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Gold saw a solid countermovement to last week’s sell-off. At 1,785 US dollars per troy ounce, the precious yellow metal’s price rose by more than $20 intraday. 

Cryptocurrency came under significant pressure again at the beginning of the week. This time it was revived rumours from China, where the government is increasing the pressure on banks regarding digital currencies and prohibiting them from engaging in cryptocurrency business. In addition, the pressure on Bitcoin miners would be further increased. As a result, mining equipment is now reportedly on its way to Texas. How long will it take until we hear Elon Musk announce a “green Bitcoin mining solution”..?

Be it as it may, today, it looked like there was blood on the street, and almost every single coin or token plummeted by two digits. Bitcoin dropped 8.2 per cent to $32,400, Ethereum shed 12 per cent to $1,955, Binance Coin fell 17 per cent to $279, and XRP lost 19 per cent to $0.62. The biggest loser among the most popular digital assets was Dogecoin, with a hefty loss of 31 per cent to $0.1890. 

Corporate and world economic news

Economic data

Economic activity in the USA strengthened in May. According to the latest statement released by the Federal Reserve Bank of Chicago, the Chicago Fed National Activity Index (CFNAI) increased to a level of plus 0.29. The index reading for April was revised to minus 0.09 after initially reporting a reading of plus 0.24. The more meaningful three-month moving average also improved to plus 0.81 in May, with a revised reading of plus 0.17 for April from plus 0.07 previously reported.

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