Markets Update Friday 25/09/2020 – Tech supports

Frankfurt 25/09/2020

Tech supports

Before the weekend, the markets presented themselves again undecided. On the one hand, there are still concerns regarding a potential 2nd virus wave on the market; on the other hand, the uncertainties regarding further aid packages are also a burden. 

However, further optimism that a vaccine could soon be available and that an agreement for further aid will soon be reached supports a positive market mood. 

Thus the trading week ended in the deep red territory for some indices, while others were still able to make up ground shortly before the end of the week.

US Markets ta a glance

Wall Street ended the trading week with significantly higher quotations.

The Dow Jones rose gradually after a lower start, ending Friday trading with a daily gain of 1.3 per cent to 27,173.96 points. The NASDAQ Composite was also friendly, rising by 2.3 per cent to 10,913.56 points.

The economic and political uncertainties weighed even more heavily on the mood at the beginning, and especially the rising coronavirus infection figures, as well as the still missing US economic stimulus program and the upcoming US presidential election, put pressure on the markets. Eventually, the recently lost strength in technology stocks began to reappear, which also gave the overall market a boost again.

The shares of Facebook, Alphabet, Amazon, Apple and Netflix rose by up to 2.5 per cent. The companies have already benefited from the corona restrictions in recent months. In the meantime, they are now also seen as a hedge in uncertain times.

Far East Markets at a glance

Before the weekend, the Asian indices moved in diverging directions.

In Japan, the Nikkei was friendly on Friday, finally showing a plus of 0.51 per cent at 23,204.62 points. 

On the Chinese mainland, however, the Shanghai Composite was 0.12 per cent weaker at the end of trading at 3,219.42 points. The Hang Seng in Hong Kong ended 0.32 per cent lower at 23,235.42 index points.

The majority of participants remained sceptical, given the rising corona infections in numerous countries, it was said. The unchanged situation surrounding a US aid package also had a negative impact.

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European Markets at a glance

The European stock markets once again showed red omens before the weekend. The EuroSTOXX 50 was virtually unchanged at the start of trading but then moved in negative territory. Before the weekend close, a minus of 0.71 per cent to 3,137.06 index units was on the board.

The Dax fell by 1.09 per cent to 12,469.20 points. The leading German index fell by 4.9 per cent in this trading week. This means that September threatens to live up to its reputation as the worst stock market month of the year. Since the beginning of the month of September the Dax 30 has lost around 500 points. The TecDAX also entered red territory after a virtually unchanged start. In the day, however, it ultimately climbed by 0.14 per cent to 3,015.51 index points. 

The fact that the number of positive tested corona cases continued to rise in many countries had a negative impact – new records of new infections are reported almost daily. In addition to travel warnings, it is above all the risk of lockdowns that could slow down the economy, some analysts warn.

Forex, gold, oil and crypto

On the Forex market, the euro came under renewed pressure on Friday after posting interim gains. The common European currency fell to a daily low of 1.1613 US dollars, its lowest level since the end of July. During the New York session, it was then traded only slightly recovered at 1.1625 US dollars.

Oil prices fluctuated back and forth on the commodities market. After initial gains, North Sea oil Brent turned negative and fell by 0.6 per cent to 41.70 US dollars per barrel. The US grade WTI fell below 40 US dollars a barrel. The newly kindled hopes for a US economic stimulus package had driven oil prices on Friday morning but didn’t have a further impact later on.

The gold price did not benefit from the rising risk aversion. It fell by 0.4 per cent to $1,860 per troy ounce. On the weekly chart, the precious yellow metal thus fell by 4.5 per cent, silver even dropped by 14 per cent compared to last week. For both precious metals, the decline is the steepest since the peak of the corona crisis in March. Market strategists speculate that the decrease in price cannot be explained solely by the stronger dollar, but that easing inflation concerns also played a role.

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Cryptocurrencies gained traction again, with Bitcoin increasing by 1.4 per cent to $10,800, Ethereum rising 0.4 per cent to $357 and XRP climbing 1.2 per cent to $0.2440. 

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Corporate and world news

Lufthansa share in the descent

On Friday in XETRA trading, the Lufthansa share fell to a new low since 2003, reaching a daily low of EUR 6.85 – ultimately losing 3.27 per cent to EUR 7.05. Meanwhile, MTU Aero Engines, Fraport and Airbus fared somewhat better, even above their crash lows in March.

Analyst Neil Glynn of Credit Suisse signalled with his price target for Lufthansa capped at 4.60 euros that the risk of a setback was much higher than before. He is particularly concerned about the detailed analysis of corporate customer traffic. According to Glynn, managers’ travel activities are likely to remain 65 per cent below the 2019 level in 2021. This is a massive problem for Lufthansa in particular.

Glynn is now expecting an operating loss on an adjusted basis of 1.8 billion euros in 2021 after 149 million euros previously and has also significantly revised his earnings forecast for 2022.

App developers against Apple and Google

Several major app developers have formed an alliance in the dispute with US online giants Apple and Google. The alliance announced in Washington on Thursday that it would join forces to fight for legal and regulatory changes in the digital marketplaces for apps from the major providers. Part of the alliance includes the developer of the popular “Fortnite” game Epic Games, the streaming service Spotify and Match Group, owner of the dating app Tinder.

The merger is likely to be directed against Apple in particular. The company has come under criticism in recent months because of its high developer fees and the distribution conditions in its App Store. The alliance specifically called on the major app providers not to force developers to offer their apps in a single digital marketplace.

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