Markets Update Friday 28/08/2020 – The day after

Frankfurt – 28/08/20

The day after

With the Fed’s promise of another massive flood of cheap money, equities remain very attractive despite the many uncertainties. Also, suspected progress in the race to develop treatments and vaccines in the fight against Covid-19 continued to cheer investors up. For example, the pharmaceutical company Johnson & Johnson plans to test a possible corona vaccine in Spain, Germany and the Netherlands. What used to take many years, if not decades, is now to be developed, tested and approved in rapid succession and less than six months.

US Markets at a glance

On Friday the rally on Wall Street stopped, even though no new records were set. The Dow Jones dropped 0.57 per cent more sharply on the last trading day of the week to 28,653.87 points. The Techwerteindex NASDAQ Composite had already risen by 0.55 per cent to 11,689.28 points when the starting bell sounded, but then barely made any further progress below the line. It closed with a gain of 0.6 per cent at 11,695.63 points.

The statements of US Federal Reserve Chairman Jerome Powell were able to keep the rally on the US stock market going on Friday. The comments are “confirmation that key interest rates will most likely remain lower in the short to medium term,” market strategist Arnab Das of Invesco told Dow Jones Newswires.

Far East Markets at a glance

The most important stock exchanges in Asia recorded gains before the weekend, but in Japan, indices turned negative. The Nikkei 225 closed 1.41 per cent lower at 22,882.65 points after initial gains. Press reports about the resignation of Japanese Prime Minister Shinzo Abe for health reasons had a negative impact here.

On the Chinese mainland, the Shanghai Composite closed at 3,403.81 points with a plus of 1.6 per cent from Friday trading. In Hong Kong, the Hang Seng climbed by 0.56 per cent to a closing level of 25,422.06 points.

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The statements by US Federal Reserve Chairman Jerome Powell of yesterday were well received in Asia before the weekend. They signal that US monetary policy will remain very loose for a long time. However, headwind continued to come from the number of new corona infections, which continues to rise worldwide.

European Markets at a glance

Europe’s stock markets showed a negative trend on the last trading day of the week. The EuroSTOXX 50 ended trading 0.44 per cent weaker at 3,315.54 index units.

The German stock market also turned into the red on Friday after an initially positive start. At the opening, the DAX rose by 0.34 per cent to 13,140.60 points but changed direction shortly afterwards. In the end, the DAX ended up 0.48 per cent down at 13,033.20 points. The TecDAX started higher as well, but then eventually lost 0.63 per cent on the day to 3,109.49 index units.

On the economic side, the German GfK consumer climate was disappointing, while economic sentiment in the eurozone continued its recovery in August.

Forex, gold, oil and crypto

On the Forex market, the Euro, in particular, benefited from the weak US dollar. At its daily high of 1.1920 US dollars, the common currency traded above the 1.19 dollar mark again. The last price paid in New York trading was 1.885 dollars. Another hot topic on the foreign exchange market was the resignation of the Japanese head of government Shinzo Abe for health reasons. As a result, the yen was also in demand because the prime minister stood for a particularly loose fiscal and monetary policy. His policy called “Abenomics” had – for the most part deliberately – put a strain on the yen in recent years.

Oil prices on the commodities market fell slightly again. On Friday evening, a barrel of Brent Crude oil is traded for 13 cents less than the previous day at 44.96 US dollars. The price of a barrel of US West Texas Intermediate (WTI) fell by 20 cents to 42.84 US dollars.

The fall of the dollar and the prospect of sustained low interest rates are giving a powerful boost to the price of gold, as the precious yellow metal itself does not pay interest. Today, the gold price rose by 1.3 per cent to 1,954 US dollars per troy ounce.

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The cryptocurrency asset class stabilized today, and the most important coins and tokens remained at their previous day’s levels. Bitcoin is traded for $11,350, Ethereum for $385 and XRP for $0.2660.

Corporate and world news

Nestlé divests Chinese water business

The food giant Nestle sells the Chinese water business to the Tsingtao Brewery Group. The transaction is part of a strategic cooperation agreement with the Chinese beer producer.

The deal includes the transfer of the local Dashan Yunnan Shan Quan brand and three factories in Kunming, Shanghai and Tianjin, Nestle announced. Tsingtao will also produce and market Nestle’s Pure Life brand in China under a licensing agreement. The companies did not disclose financial details about the deal. China is the second-largest market of the Swiss group.

Nestle is also considering selling parts of its water division in North America, including the Pure Life brand. A corresponding strategic review should be completed by early 2021. The division has long been the company’s problem child.

Daimler supplies e-transporters to Amazon

The world’s largest online retailer orders electric delivery vans from Daimler on a large scale. The delivery of more than 1200 eSprinter vans and around 600 eVito city delivery vans is the largest order for Mercedes-Benz Van to date, the Stuttgart company announced. The vehicles are to be used in several European countries starting this year.

The eSprinters produced for Amazon have a range of almost 180 kilometres and can be recharged to 80 per cent within 25 minutes thanks to an integrated quick-charging function. The eVitos, which are primarily used in inner-city traffic, can travel 150 to 184 kilometres on one battery charge.

Delivery Hero disappoints in first Dax week 

The Dax listing has not been good for Delivery Hero’s shares so far. The food supplier’s shares slipped to their lowest level in XETRA trading since mid-June. By the end of trading, however, they were able to limit their losses to minus 0.90 per cent at 90 euros.

The business figures from Thursday may also have had a further negative impact. For example, the record number of orders during the Corona pandemic Delivery Hero brought in deep red figures. The bottom line for the first half of the year was a loss of around 443 million euros in continuing operations, more than twice as much as a year earlier.

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