Markets Update Friday 15/11/2019 – The record-hunt commences

Frankfurt – 15/11/2019

The record-hunt commences

Wall Street was once again in record fever before the weekend. By the end of floor trading in Frankfurt on Friday, the Dow Jones Index had reached a new all-time high. The mark of 27,900 points was crossed for the first time. Apparently, many investors in New York are already counting on a settlement in the trade dispute between the USA and China soon to take shape. Positive signals came from Larry Kudlow, Donald Trump’s chief economic advisor, who said the US president was satisfied with progress towards a “phase-one trade agreement” – a first agreement was within reach. 

Previously, US economic data had initially disappointed but had only been able to stop the Dow in its upward movement for a short time. In October, the US industry reduced its production for the second time in a row and also significantly. However, the strike at the large car manufacturer General Motors (GM) probably played a role. Car production fell sharply. US retail prices rose by 0.3 per cent in October, slightly more than economists had expected.

The Dow closed at a record high of 28,004.98 points, 0.8 per cent above its previous day’s close. At the same time, the NASDAQ Composite rose to plus at the start of trading and then remained in the profit zone. Its closing level: plus 0.73 per cent at 8540.83 points, a new all-time high.

Far East Markets at a glance

The stock markets in the Far East did not find a uniform trend on Friday.

In Japan, the Nikkei ultimately gained 0.7 per cent to 23,303.32 points. On the Chinese mainland, however, the Shanghai Composite recorded a loss of 0.64 per cent to 2,891.34 points. The Hang Seng in Hong Kong, on the other hand, showed little movement with a minimal gain of 0.01 per cent to 26,326.66 units.

European Markets at a glance

Europe’s stock markets saw a slight upturn on Friday. The EuroSTOXX 50 index was trending upwards and closed 0.56 per cent higher at 3,709.46 index units. The German leading index Dax closed almost unmoved above the 13,200 points mark. 

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Forex, gold, oil and crypto

The euro rose on Friday. In New York, the common currency reached its high for the day at 1.1057 US dollars, after trading at a low of 1.1015 US dollars hours earlier. The last to be paid was 1.1053 dollars. The European Central Bank (ECB) had meanwhile set the reference price at 1.1034 (Thursday: 1.0997) dollars. The dollar thus cost 0.9063 (0.9093) euros.

In the course of the day, weaker-than-expected US economic data put the dollar under pressure, while the euro received a boost in return. At first, the Empire State Index, which measures industrial sentiment in the state of New York, had surprisingly clouded over. Subsequently, US industrial production fell more than expected in October. However, the unique effect of a strike at the large car manufacturer General Motors (GM) may have played a role.

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Oil prices started to rise again on Friday evening. A barrel (159 litres) of Brent North Sea oil costs 62.35 US dollars in the afternoon. The price for a barrel of the American variety West Texas Intermediate (WTI) fell by 21 cents to 57.76 dollars. Currently, the troy ounce of gold is traded 0.4 per cent lower at just under 1,466 dollars.

Cryptocurrencies took another small hit on Friday. The overall market capitalization shrank to just $233 billion, and the leading three digital assets lost approximately 3 per cent. A Bitcoin thus currently costs $8,400, one Ethereum $185 and one XRP $0.26. 

Corporate and world news

Next cannabis group breaks down

In the night of Friday, the marijuana producer Aurora Cannabis opened his books. The quarter ended 30 September was not quite as analysts and investors had hoped. The estimates had been based on the sales increase of the previous quarter and thus raised hopes for a further increase: Analysts expected sales of 123 million Canadian dollars – well above the 98.9 million Canadian dollars recorded in the previous quarter. Aurora Cannabis had a turnover of 75.245 million Canadian dollars in the first fiscal quarter of 2020. This corresponds to a drop in sales of around 24 per cent compared with the previous quarter (Q4 2019). The total gross profit amounted to 53.7 million Canadian dollars.

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In addition, only 12.5 tonnes of cannabis was placed on the market in the past quarter – compared to 17.7 tonnes in the same quarter last year. On the other hand, the Canadian company reported production of 41.4 tonnes of cannabis – an increase of over 40 per cent compared with the end of July. This development was due to the more efficient production process: production costs per gram were reduced from 1.14 to 0.85 Canadian dollars. “Our production with this high quality at low cost was specially designed to be reproducible and scalable,” explained Aurora-CCO Cam Battley in a conference call.

However, the increase in production did not in the least appease investors. In the pre-trade on the NYSE, the hemp company’s paper was already rushing through the roof. In the early official trading it went down 11.09 per cent to 2.93 US dollars – in the further course of trading it went still further into the minus. The share closed 17.02 per cent cheaper for 2.73 US dollars. This continues the downward trend: the evening before, the share price closed 7.32 per cent cheaper at 3.29 US dollars per share.

Alibaba for the second time

The Internet group’s IPO in Hong Kong has met with great interest. The issue was several times oversubscribed, according to a press release to investors. People familiar with the IPO also spoke of it. The Chinese Amazon rival wants to raise 13.4 billion dollars with the second IPO. The issue price is to be fixed on 20 November, the first trading day in Hong Kong is scheduled for 26 November.

Applied Materials convinces

Applied Materials delighted investors with its sales outlook for the first quarter. The world’s largest chip plant manufacturer announced after the close of trading in the USA that it expects revenues of $4.1 billion-plus or minus $150 million for the three months thanks to high demand for processor chips. Experts surveyed by Reuters had so far only expected revenues of 3.71 billion dollars.

In the fourth quarter (ended 27 October), net profit fell from $757 million to $698 million. Turnover fell by 0.1 per cent to 3.75 billion dollars. However, both figures exceeded analysts’ expectations. The development of Applied Materials is seen as an indicator of the state of the semiconductor industry. The Applied share climbed by more than seven per cent in New York trading.

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