Markets Update Friday 12/03/2021 – Lightyears Apart

Frankfurt – 12/03/2021

Lightyears Apart

That’s how quickly things can change in the financial markets: One year ago today, the fastest stock market crash in history began. For example, Germany’s leading index, the DAX, plummeted by over 12 per cent on 12 March 2020. It was the second-largest daily loss in its history. But this historic crash has long been history – and almost forgotten. 

Investors and traders are already betting on the post-corona boom when people will be able to travel and shop freely. Simultaneously, the flood of money from central banks and states is driving the stock markets. They are pumping trillions into the economy to deal with the financial consequences of the lockdowns. The new economic stimulus package of 1.9 trillion dollars adopted in midweek alone should give the stock markets a further boost. According to experts, the stimulus cheques of 1,400 dollars to US citizens contained therein could partially flow into the stock market.

Since the corona panic crash, the DAX has gained three quarters. In the past trading week, it gained over 4 per cent alone and marked new all-time highs. This was the best weekly performance in four months. Wall Street even managed its biggest weekly gain in six years!

US Markets at a glance

Before the weekend, the US indices developed inconsistently.

While the Dow Jones trended upwards and gained 0.90 per cent to 32,778.64 points, the NASDAQ Composite slipped 0.59 per cent to 13,319.86 points.

Rising market interest rates in the USA had a negative impact. The highly valued technology sector is reacting particularly sensitively to this because the companies in the sector usually have to shoulder high investments. The industry also came under pressure from China, where regulators imposed fines on some of the country’s largest industry players.

There have also been reports that the US administration wants to impose stricter conditions on previously approved export licences for some Chinese communications company Huawei suppliers.

The yield on 10-year US government bonds rose back above the 1.60 per cent mark into the region of its high for the year on Friday and was about nine basis points higher at 1.63 per cent in late trading. There was talk in a trade that asset managers had pulled funds out of the bond market as their appetite for safe-haven assets waned. 

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Far East Markets at a glance

Markets in the Far East were on the rise before the weekend.

The Japanese benchmark index Nikkei ultimately gained 1.73 per cent to 29,717.83 points. On the Chinese mainland, the Shanghai Composite gained 0.47 per cent to 3,453.08 points. Only the Hang Seng leading index in Hong Kong was down 2.20 per cent to 28,739.72 points.

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The Asian markets were also primarily driven by good news from Wall Street. There, the recovery rally on the stock markets continued again on Thursday. US President Joe Biden, meanwhile, signed into law the 1.9 trillion US dollar corona aid package passed by Congress. The European Central Bank’s announcement to increase its bond purchases to limit the rise in bond yields provided support as well.

European Markets at a glance

Investors in Europe held back on Friday.

The EuroSTOXX 50 opened Friday’s trading session weaker and subsequently remained in the red. In the end, it lost 0.32 per cent to 3,833.36 points.

After the series of gains of the previous days, there was a consolidation on Germany’s stock market on Friday. The DAX started the trading session weaker and was also lower in the further course of the day. In the end, it went into the evening with a minus of 0.46 per cent at 14,502.39 points. The TecDAX also moved weaker, closing 0.91 per cent lower at 3,329.44 points. 

Traders spoke of small profit-taking before the weekend and pointed out that yields were already rising again – starting from the USA.

Forex, gold, oil and crypto

Broad-based US dollar strength halted the euro’s recent rally on the foreign exchange market for the time being. The greenback strengthened against all other major currencies thanks to rising US bond yields and good economic data. In the New York trading session, however, the euro was able to limit the losses from the European session somewhat, trading at 1.1949 US dollars.

Oil prices moved little from the spot on Friday. There was talk on the market of a lack of impetus—Brent crude oil last cost 11 cents less today at 69.52 US dollars per barrel than on Thursday. WTI light oil from the USA fell by five cents to 65.97 dollars.

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The gold price came under pressure in Asian and European business and fell to $1,700, but ultimately gained over $5 on the daily to $1,728 per troy ounce.

The cryptocurrency market is seemingly entering the next phase of the recent bull-run. Bitcoin now crossed the $60,000 mark and ended the day just above $61,000. Ethereum also gained over 7 per cent to $1,900, while most other altcoins such as Cardano, XRP, Polkadot, Litecoin or Bitcoin Cash only gained a few percentage points. 

Corporate and world economic news

Economic data

Inflationary pressures in Germany, as measured by the Harmonised Index of Consumer Prices (HICP), remained stable in February. As the Federal Statistical Office announced, the HICP rose at an annual rate of 1.6 (previous month: 1.6) per cent. The statisticians thus confirmed – as expected by economists – their preliminary estimate of 1 March.

British exports to the European Union have slumped after the Brexit trade agreement with the EU came into force. In January, they fell by 40.7 per cent, as the statistics office announced in London on Friday. The statistics include all goods, with the exception of some precious metals. Imports from the EU also fell sharply, by 28.8 per cent. The statistics office pointed out that trade was not only burdened by Brexit and new customs regulations but also by the consequences of the corona lockdowns.

Industry in the eurozone increased its production more than expected in January. According to Eurostat, the statistics authority, production (excluding construction) rose by 0.8 per cent compared to the previous month, seasonally adjusted. Economists surveyed by Dow Jones Newswires had expected an increase of only 0.3 per cent.

In the USA, upstream price pressure increased moderately, as expected. In February, producer prices rose by 0.5 per cent compared to the previous month. Economists surveyed by Dow Jones Newswires had expected an increase of this magnitude. According to the US Department of Labour, core producer prices – which exclude volatile food and energy prices – rose 0.2 per cent from the previous month. Economists had forecast an increase of 0.3 per cent.

The mood of US consumers brightened in March. The University of Michigan’s index of US consumer sentiment rose to 83 in the mid-month survey. Economists surveyed by Dow Jones Newswires had expected a reading of 78.9. It was 76.8 in the survey at the end of February.

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