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Frankfurt – 15/05/20
A Good Friday
At the end of the week, the bulls have returned, and the markets have increased significantly. Both the Dow Jones and the German Dax gained some ground again after the recent losses. In a week-on-week comparison, however, the balance remains negative – and the further outlook uncertain, as the positive price jumps still seem to be mostly due to bargain hunters. The situation and prospects remain rather bitter.
In the event of smaller price declines, one can thus still rely on these being used for purchases. Nevertheless, the uncertainty remains high, given the continuing volatility. Even weak US economic data painted a bleak picture, but they were, once again, disregarded. The economic effects of the current pandemic are far from over.
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US Markets at a glance
The stock markets in the USA fought their way into positive territory on Friday. The Dow Jones was 0.72 per cent lighter at 23,454.83 points at the start of the trading session. Subsequently, however, it was able to reduce its losses and even made it into the profit zone in late afternoon trading. The stock market barometer entered the weekend 0.29 per cent higher at 23,685.42 points. The NASDAQ Composite also opened the day 1.16 per cent lower, but in the end, managed to break even and entered the profit zone with a gain of 0.79 per cent at 9,014.56 points.
The intensifying rhetoric between the US and China again raised concerns among market participants, and another round in the trade dispute could quickly undo the tentative economic recovery. US retail data also continue to paint a gloomy picture. In April, the decline in sales was far above expert expectations. On the other hand, data from the Empire State Manufacturing Index turned out better than forecast.
Far East Markets at a glance
The Asian stock markets rose somewhat on Friday after several weak trading days. In Tokyo, the Nikkei-225 started the weekend with a daily gain of 0.6 per cent at 20,037 points. Week-on-week this means a minus of about one per cent. On the Chinese mainland, the Shanghai Composite fell by 0.07 per cent to 2,868.46 index units by the end of trading. The Hang Seng in Hong Kong fell by 0.14 per cent to 23,796.47 units.
In China, amid the global crisis, there are at least signs of industrial recovery. Industrial production rose by 3.9% in April compared with the previous year, according to the statistics office in Beijing. This is the first increase this year. Moreover, the growth was higher than the economists surveyed by Bloomberg had expected.
European Markets at a glance
Although the European stock markets were cautious on Friday, the signs were positive. By the end of trading, the EuroSTOXX 50 had gained 0.39 per cent to 2,771.11 units.
Although the leading German index closed today 1.2 per cent higher at 10,465 points, it remained almost exactly 4.0 per cent lower than a week ago. The TecDAX also gained in the day, after having already risen at the beginning of trading. Its closing level: plus 0.17 per cent at 2,919.35 points.
Whether today was more than just a technical counter-reaction, especially since today was a small expiration day for options on the Eurex derivatives exchange, has to be seen.
Forex, gold, oil and crypto
On the Forex market, the euro exchange rate gained a little bit today. The euro was boosted above all by the weakening of the US dollar on a broad front. Extremely weak economic data hit the American currency. Fragile economic data from Germany did not affect the euro since it was widely expected. According to the Federal Statistical Office, the German economy suffered the worst slump in the first quarter due to the corona pandemic since the global financial and economic crisis. In the afternoon, the common currency, the euro, cost 1.0835 US dollars, half a cent more than the daily low.
Oil prices rose again on Friday. Market observers pointed to the latest demand forecast from the International Energy Agency (IEA), which is causing oil prices to rise. A barrel of North Sea Brent last cost $31.91. That was 78 cents more than on Thursday. The price for a barrel of the US type WTI rose by 1.43 cents to $28.99.
On the last trading day of the week, the gold price once again recorded significant gains: in the evening it rose to as high as $1,747 an ounce.
The cryptocurrency market remained widely unchanged today with Bitcoin at $9,500, Etherum at $203 and XRP at $0.2010.
Corporate and world news
Germany in recession – The GDP figures for the first quarter today showed how difficult the situation in the country is and remains. Germany slipped into recession with a 2.2 per cent drop in economic output. However, this had been expected and was already priced into the markets.
US figures disastrous – Retail sales in April were down 16.4 per cent on the previous month, below expectations of minus 12.0 per cent. There has not yet been such a major decline since the statistics began in 1992.
Zoom wants strong expansion
Corona profiteer Zoom, which has been criticised for concentrating its development activities in China, wants to set up two new development sites in the USA. In Pittsburgh and Phoenix, up to 500 new software developers are to be hired in the coming years, according to the video conferencing service.
Zoom was first intended for use in companies, but in the corona crisis, its use by private individuals exploded, as well as for sports courses, church services or education. This also revealed several security flaws, which Zoom has since remedied.
Steff has been actively researching the financial services, trading and Forex industries for several years.
While putting numerous brokers and providers to the test, he understood that the markets and offers can be very different, complex and often confusing. This lead him to do exhaustive research and provide the best information for the average Joe trader.