Markets Update Friday 18/09/2020 – Witches and corona demons

Frankfurt – 18/09/2020

Witches and corona demons

Gradually, autumn comes to the stock markets, because not only the leaves on the trees in the northern hemisphere but also the prices are falling. It is getting more uncomfortable. 

Today, on one of these “Triple Witches’ Sabbaths” the professional investors tried to bring the courses in their desired direction. In the end, the direction was decidedly south.

In addition, the rising corona infection figures in many European countries depressed the mood on the stock markets. Fears of stricter restrictions on everyday life put pressure on tourism stocks in particular and fed economic worries. Market observers know that if the number of cases rises to such an extent that lockdowns have to be tightened to such an extent that they derail the economic recovery, then it becomes a risk factor.

US Markets at a glance

The mood on Wall Street was once again pretty gloomy.

The Dow Jones closed lighter before the weekend, losing 0.88 per cent to 27,657.42 points. The NASDAQ Composite also trended sharply downhill and ultimately fell by 1.07 per cent to 10,793.28 points.

Next to triple witches sabbath, the political hang-game in the dispute over the corona economic stimulus package caused Wall Street to lose ground on Friday. Stock market experts also cited as a burden the renewed concerns about a further deterioration in relations between the USA and China.

Far East Markets at a glance

Before the weekend, the Asian stock markets were on the rise.

In Japan, the Nikkei 225 ultimately gained 0.18 per cent to 23,360.30 index points. The bulls also dominated on the Chinese mainland: The Shanghai Composite advanced by 2.07 per cent to 3,338.09 index units. In Hong Kong, the Hang Seng recorded an increase of 0.47 per cent to 24,455.41 points.

Despite negative signals from the US markets, the Asian markets performed well. China seemed to be confident of an early economic recovery, which supported share prices. Hopes for an early corona vaccine also remained high. However, experts from Citigroup warned not to get too infected by the optimists. Uncertainty remains high, and a mutation of the virus cannot be ruled out.

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European Markets at a glance

European stock markets tended to be weaker, thus emulating the US markets. The EuroSTOXX 50 ended the day with a loss of 0.99 per cent at 3,283.69 units.

After the Dax had barely made any headway for a long time, it plunged into the red shortly before the close of trading and fell below the 13,200 mark. It started the weekend with a discount of 0.7 per cent. The weekly balance was, therefore, also slightly negative. The TecDAX, on the other hand, closed with a plus of 0.55 per cent at 3,118.02 units.

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On Friday, most investors’ attention was focused on the decline in the futures exchanges. Here, options and futures on the indices expired at noon. This was followed in the evening by options on individual stocks, completing the Triple Witches Sabbath. Fluctuations often characterize trading on expiration days.

Forex, gold, oil and crypto

On the Forex market, the euro exchange rate has also moved little in US trade and remained well above the 1.18 US dollars mark. Most recently, the common European currency was exchanged for 1.1851 dollars.

Oil prices were also trending slightly upwards on Friday. While the US WTI variety rose by 31 cents to 41.28 US dollars, North Sea Brent oil increased by only 6 cents to 43.36 US dollars. Saudi Arabia had pressed on Thursday for compliance with the production limit agreed by the oil cartel Opec and its partners (Opec+). At an online meeting on Thursday, Saudi Energy Minister Abdulasis bin Salman warned against producing more oil than allowed.

In the wake of the weaker dollar, the price of gold rose by 0.7 per cent to 1,955.71 US dollars per troy ounce. Silver was trading 0.4 per cent higher at 27.20 US dollars per ounce. 

Most major cryptocurrencies were sold at lower prices compared to yesterday. Bitcoin’s price fell by 0.1 per cent to $10,920, while Ethereum and XRP lost 1.6 per cent to $380 and $0.25 respectively.

Corporate and world news

Economic data

Producer prices from Germany showed that the pressure on prices at the producer level is continuing to ease. Producer prices in August fell by 1.2 per cent year-on-year, as the Federal Statistical Office announced in the morning. In July, the decline in prices had still amounted to 1.7 per cent. Analysts had expected a rate of minus 1.4 per cent for August.

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The mood of US consumers surprisingly brightened significantly in September. The index for consumer sentiment in the US calculated at the University of Michigan rose to 78.9 in the mid-month survey. In contrast, economists surveyed by Dow Jones Newswires had expected a level of 75.4. In the survey at the end of August, it was 74.1.

Japan cannot get rid of its chronically weak inflation despite an extremely loose monetary policy. The core inflation rate (excluding fresh food) slid back into negative territory in August, according to government figures released on Friday. Compared to the same month last year, it was minus 0.4 per cent. Overall inflation was slightly above zero at 0.2 per cent.

Trump blocks Tiktok and Wechat

The government of US President Donald Trump is increasing pressure in the fight against Chinese social media. Starting Sunday, it is to be no longer possible in the USA to download Tiktok and the chat service WeChat. The Ministry of Commerce announced this on Friday. Tiktok is to function besides starting from November 12 for users in the USA no longer, while this is to be in the case of WeChat starting from Sunday the case. Trump has at least set a deadline of November 12, within which national security concerns can still be addressed. Until then, there could still be a deal with the US companies Oracle and Walmart.

New Spanish big bank

The two Spanish financial institutions Caixabank and Bankia merge and together form the largest institution in the country. The banks announced that synergies of 700 million euros per year are expected. Together, the two banks have assets of around 600 billion euros. The merger will take place via an exchange of shares.

Since the financial crisis, the number of banks in Spain has shrunk considerably. However, provisions for the corona crisis and the persistently low key interest rates in the eurozone continue to put pressure on financial institutions to consolidate to reduce costs.

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