Frankfurt – 21/02/20
Down it goes
The stock markets ended the week deep in the red. The death toll from the novel coronavirus continues to rise. In China, 118 patients died again within one day. In mainland China, the number of proven infections had increased by 890 to a total of 75,466 cases by Friday morning, the Health Commission in Beijing announced. According to official figures, 76,726 people are infected worldwide. With the new deaths, there are now 2,247 deaths worldwide.
US Markets at a glance
The Dow Jones was in the red throughout the entire session, losing 0.78 per cent to 28,992.41 points. The tech stocks index NASDAQ Composite slipped much more sharply into the red, losing 1.79 per cent to 9,576.59 points.
Investors fear that the coronavirus crisis could have a greater impact on the American economy than previously thought. In February, economic growth in the USA slowed down. The Purchasing Managers’ Index indicates this for the US service sector, which was compiled by the market research institute Markit. The indicator fell from 53.4 points in the previous month to a record low of 49.4 points. Economists had only expected a decline to 51.5 points. A value below 50 points signals a decline in economic activity.
The mood in industry has also clouded over more than expected. The relevant indicator dropped from 51.9 points in the previous month to 50.8 points. Only a slight decrease to 51.5 points had been expected. It is now feared that the coronavirus crisis could have a more significant impact on the American economy than previously thought.
Far East Markets at a glance
The coronavirus and fear of the economic consequences are keeping investors on the Asian stock exchanges in check. Japan’s leading index, the Nikkei 225, fell by 0.4 per cent to 23,386.74 points on Friday. Concerning China, the trend was mixed. While the CSI-300 index, which comprises the 300 most important stocks on the Chinese mainland stock exchanges, recently rose slightly, the Hang Seng in Hong Kong lost almost one per cent.
European Markets at a glance
Europe’s stock markets also came under pressure on Friday. The EuroSTOXX 50 had a weaker start and was also clearly in the red at the end of trading. It ended the weekend with a discount of 0.6 per cent at 3,800.13 points.
The German stock market barometer closed at 13,579 points – 0.6 per cent lower than the previous day. The weekly chart shows that the Dax thus lost 1.2 per cent after having gained strongly over the last two weeks. The TecDAX also moved into the loss zone over the course of the year, after having made a slight gain at times around midday. It closed the weekend 0.83 per cent lighter at 3,237.15 units.
Forex, gold, oil and crypto
The euro made a strong move up in the afternoon and climbed to $1.0856. Weak US economic data pushed the dollar higher. In addition, the Euro-Zone saw surprisingly good figures. The European Purchasing Managers’ Sentiment Barometer unexpectedly rose to 51.6 in February. The same was true for the German Manufacturing Index, which has been ailing for some time, which reached 47.8 digits.
The euro made a strong move up in the afternoon and climbed to $1.0856. Weak US economic data pushed the dollar higher. In addition, the Euro-Zone saw surprisingly good figures. The European Purchasing Managers’ Sentiment Barometer unexpectedly rose to 51.6 in February. The same was true for the German Manufacturing Index, which has been ailing for some time, which reached 47.8 digits.
The Turkish lira went downhill. Continuing fighting in neighbouring Syria pushed the Turkish currency to a nine-month low. In turn, the dollar rose to 6.1134 lire.
The virus fears are reflected above all in the commodity markets. North Sea Brent crude oil fell by 1.8 per cent to 58.22 dollars per barrel.
In return, investors fled to the “safe haven” gold. The precious metal climbed to a renewed seven-year high of 1642.98 dollars per troy ounce.
Investors also turned to Bunds, pushing the yield on ten-year securities to a four-and-a-half month low of minus 0.465 per cent. The yield on 30-year US government bonds slid to a record low of 1.903 per cent. Ten-year Treasuries yielded 1.47 per cent, their lowest level since September. On the foreign exchange market, investors covered themselves with the Swiss currency. As a result, the euro remained at its four and a half year low of 1.0605 francs.
Cryptocurrencies remained sidelined on Friday without any major price-developments occurring. Bitcoin is currently trading at approximately $9,600, while Ethereum sits at $269 and XRP at $0.2740.
Trade with the High Leverage Brokers
Corporate and world news
Wells Fargo pays a billion-dollar fine
An affair involving bogus accounts will once again cost the US bank Wells Fargo dearly.
The financial institution has accepted fines totalling 3.0 billion dollars as part of a settlement with the Justice Department and the SEC, the SEC announced in Washington on Friday. Wells Fargo had already received severe penalties from US authorities for the dummy account scandal and a series of other breaches of the rules on the sale of financial products. Also, there were numerous dismissals and expensive settlements with class action plaintiffs.
Wells Fargo admitted in 2016 that for years employees had been opening bank and credit card accounts on a large scale that were not authorized by customers. Shortly afterwards, then CEO John Stumpf was out of a job. But even the US authorities did not cut a good figure in the affair. The bank supervisory authorities later admitted that the controls were inadequate and that several opportunities were missed to get to the bottom of the tricks earlier. Although there had been indications of whistleblowers and media reports years before, consequences did not follow until September 2016.
Sixt divests itself completely from leasing subsidiary
The car rental company Sixt is separating from its leasing subsidiary. Sixt Leasing, which is also listed on the stock exchange, is to be taken over by Hyundai Capital Bank Europe, which offers car loans and leasing. Sixt is selling its remaining shares of almost 42 per cent to the financial services provider for up to 163.4 million euros. Hyundai Bank is offering the remaining shareholders of Sixt Leasing 18 euros per share, plus a 90 cent dividend for the past year. This would cost them up to 390 million euros.
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.