Markets Update Friday 03/07/2020 – Independence Day

Frankfurt – 03/07/20

Independence Day

There was no trading on Friday in the USA due to the celebrations around “Independence Day” on Saturday, and the US markets said a friendly farewell to the long weekend already yesterday. 

Thus it was missing on today’s Friday at investors, traders and also trend-setting impulses. Overall, the foreign exchange market, as well as many other markets, were a snooze fest.  

From China and Japan, investors expected the Purchasing Managers Index for the service sector. In China, the Purchasing Managers’ Sentiment in the services sector surprisingly continued to improve, reaching its best level in over a decade. The Purchasing Managers’ Index for the service sector, as calculated by the business magazine “Caixin”, rose to 58.4 points in June, up from 55.0 points in the previous month. The June value is the highest since April 2010, which means that the indicator is well above the level it had before the outbreak of the corona crisis. 

The counterparts for Germany and the eurozone also reported surprisingly strong gains and were only just below the 50 points mark, which signals economic growth.

US Markets at a glance

Wall Street was closed today for the Independence Day celebrations. The US leading index, the Dow Jones, gave up some of its initial gains on Thursday – but by the end of trading, a premium of 0.36 per cent to 25,828.45 units remained on the price board. The NASDAQ Composite went 0.52 per cent higher at 10,207.63 points into the long weekend.

Far East Markets at a glance

Asia’s major stock markets gained on Friday. In Tokyo, the Nikkei started the weekend 0.72 per cent higher at 22,306.48 points.

Meanwhile, the increase was more pronounced on the Chinese mainland, where the Shanghai Composite gained 2.01 per cent to 3,152.81 units. In Hong Kong, the Hang Seng finally gained 0.99 per cent with 25,373.12 points.

The US labour market report created a basic positive mood – the data was significantly better than expected. Hopes continued to focus on rapid economic recovery.

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Investors were not deterred by the fact that a non-partisan bill was passed in the USA for new sanctions against China.

European Markets at a glance

European markets were weaker before the weekend. The EuroSTOXX 50 was trading at 3,321.83 units at the start of trading with little movement. Later on, however, it slipped into the loss zone.

At the end of trading, the Dax 30 was 0.64 per cent lower at 12,528.18 points. The TecDAX remained at its previous day’s closing price.

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On Friday, after the rally of the previous day, Europe’s stock markets experienced slight profit-taking. 

Forex, gold, oil and crypto

The Forex market was in a yawning void today. The euro hardly moved at all on Friday in a calm environment. In the late afternoon, the common currency, the euro, is valued at 1.1240 US dollars, about the same as yesterday.

Oil prices have fallen at the end of a predominantly friendly week. On Friday evening, a barrel (159 litres) of Brent crude cost 44 cents less than on Thursday, at $42.70. The price for the American variety West Texas Intermediate (WTI) fell by 45 cents to $40.20.

Gold also hardly moved at all today and remained in a very narrow range around $ 1.775 an ounce. 

The same applied to the cryptocurrency market. The major digital assets remained roughly at their previous day’s levels, such as $9,100, Ethereum at $227 and XRP at $0.1770. One of the biggest movers today was once again Cardano with a daily gain of 8.17 per cent to $0.10. 

Corporate and world news

Deutsche Bank interested in Wirecard

Deutsche Bank is examining possible financial aid for Wirecard Bank. “In principle, we can envisage providing this support within the scope of continuing business activities, should the need arise,” the Frankfurt-based bank announced.

The news agency Reuters quotes insiders as saying that Deutsche Bank is thus in a good starting position for a potential takeover of Wirecard Bank. Deutsche Bank CEO Christian Sewing had repeatedly stressed how important the payment transaction business was for his institution. As a rule, stable earnings can be achieved with this business. 

Ferrari to drive without Vettel

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Ferrari team boss Mattia Binotto has defended the retirement of Sebastian Vettel at the end of the season.

“The pandemic has changed the whole world, not just Formula 1,” the 50-year-old explained on Friday before the season opener in Austria the background to the separation from the four-time world champion after his contract expired. Although Vettel was still “the first choice” for Ferrari in winter, the cuts due to the coronavirus had “changed the whole situation”, Binotto explained.

Previously, Vettel had contradicted the “joint decision” for a farewell announced in May. He had been surprised and shocked by Binotto’s phone call informing him of the team’s decision. “I understand that, that’s normal,” Binotto said. He pointed out that because of the corona crisis, the budget limit for 2021 had been significantly reduced and the planned rule reform had been postponed by one year to 2022.

“We made a decision then, that’s our responsibility,” Binotto said. He said it was “unfortunate” for Vettel that he was unable to promote himself due to the cancellation of many races this year. The time with Vettel was “great”, he said. “He’s a great champion and a great person,” praised Binotto.

Ferrari shares on the Italian stock exchange on Friday ultimately lost 0.84 per cent to 153.60 euros.

Zur Rose shares continue record hunt 

In a further move on Thursday, rose 8.33 per cent to 286 francs on the SIX. In the last seven trading days alone, they have gained around 30 per cent. They received a substantial boost from the expansion of the European market leadership through the takeover of activities of the German Apotal Group.

As expected, the Bundestag gave the green light for the introduction of the e-prescription with the passing of the Patient Data Protection Act (PDSG) on Friday. This is very positive for online pharmacies, explained analyst Alexander Thiel of the investment bank Jefferies. About 80 per cent of prescriptions concern chronic patients and are therefore not time-critical. It is therefore convenient for patients to order from home, especially since many drugs are not immediately available in private pharmacies anyway. Besides, there are lower prices for non-prescription products.

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The papers of the Shop Apotheke are also in demand, at times with a plus of 2.7 per cent, and are only just below their record high.

Rolls-Royce share plummets

The British engine manufacturer Rolls-Royce is exploring ways to raise capital. The group “is examining several possible options to strengthen its balance sheet,” it announced in London on Friday afternoon. The considerations are still at an early stage, and a decision has not yet been made. Earlier, the news agency Bloomberg had reported on the matter referencing insiders.

Bloomberg had reported that the company was considering a capital increase and the sale of assets. The ITP Aero division is a possible candidate for a sale. In a capital increase, the group could aim to raise 1.5 to 2 billion British pounds (1.7 to 2.2 billion euros). Rolls-Royce did not go into these details in its statement.

Many airline managers and the aircraft manufacturers Boeing and Airbus expect the long-haul business to be the last to recover from the crisis. They, too, have cut their production plans as a result of the pandemic – especially in the case of wide-body jets, whose engines often come from Rolls-Royce.

The stock had already plummeted in response to the Bloomberg news – most recently it was quoted at GBP 2.63 in London, 9.69 per cent lower.

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