Frankfurt – 11/10/2021
Columbus
Overall, movements on Wall Street and other major markets were limited on Monday. The reason was the “Columbus Day” holiday in the USA. Therefore, there was no trading on the bond market at the beginning of the week. In the background, concerns continue to smoulder that the ongoing oil price rally could lead to energy shortages and stall the global economic recovery. Additionally, there were no market-moving economic data releases today.
Market participants in New York are now eagerly awaiting the start of the US reporting season, which the banks traditionally herald in the coming days. On Wednesday, Dow member JP-Morgan opens its books. On Friday, Goldman Sachs is on the agenda. Banks are actually seen as winners in an environment of rising interest rates because higher rates increase the most important earnings component at most banks: the interest margin.
After a breathtaking rally of 96.3 per cent in the second quarter, analysts believe that S&P 500 companies will post a plus of 29.6 per cent for the third quarter compared to the same quarter last year. However, the corona-related slump last year must be taken into account.
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US Markets at a glance
Wall Street was ultimately weaker at the start of the week. The US leading index Dow Jones made significant gains in early trading, but later the profits shrank continuously, and the leading index slipped into the red, closing down 0.72 per cent at 34,496.85 points. The NASDAQ Composite tech index also gave up all its gains in trading and closed with a minus of 0.64 per cent at 14,486.20 index points.
Due to Columbus Day, the bond market in the USA remained closed on Monday, so trading was also quiet on the stock market. Investors also held back before the start of the reporting season this week. On Wednesday, the banks JPMorgan, Bank of America, Morgan Stanley, Citigroup and Goldman Sachs, among others, will present their figures for the third quarter.
Supply chain problems, labour shortages and rising energy prices, which contribute to inflation, are still seen as burdening factors. Now we will see how the companies dealt with this in the last quarter.
Far East Markets at a glance
On Monday, the majority of the most important Asian indices went up. In Japan, the Nikkei benchmark index rose by 1.60 per cent to 28,498.20 points by the closing bell. However, on the Shanghai stock exchange, the Shanghai Composite closed almost unchanged at 3,591.71 points. In Hong Kong, the Hang Seng posted a solid gain of 1.96 per cent to 25,325.09 units at the close of trading.
Traders attributed the gains to talks between the US and China that could normalise strained economic relations. Shares in troubled property group China Evergrande remained suspended from trading to start the new week in Hong Kong. The group is eagerly awaiting whether it will be able to make coupon payments of more than $148 million due on Monday, it said.
European Markets at a glance
European stock markets were indecisive in Monday trading. The EuroSTOXX 50 lost slightly at the opening and ultimately ended with a minus of 0.02 per cent at 4,072.52 points.
The DAX already opened with a significant loss but was ultimately able to limit this and closed a marginal 0.05 per cent lower at 15,199.14 points. The TecDAX fell slightly at the opening and hovered between the zero line and the loss zone. In the evening, it was finally 0.2 per cent weaker at 3,576.35 points.
The European stock markets were initially quiet at the start of the week. There were only a few economic data items on the agenda. In the Eurozone, production data from the Italian industry were published, which were slightly better than expected. In addition, several important central bankers, including ECB chief economist Philip Lane, spoke again today.
Forex, gold, oil and crypto
In fairly quiet trading on the foreign exchange market, the euro had a hard time far and wide and remained under pressure in US trading. The single currency was last traded at 1.1559 US dollars, slightly lower than in early European business.
Inflation fears are currently being fuelled worldwide, above all by the rapidly rising energy prices. Demand is high, but at the same time, the oil cartel Opec+ is behaving surprisingly disciplined and keeping supply constant. The barrel price of North Sea crude rose by around 1.6 per cent and that of American West Texas Intermediate (WTI) by 2.3 per cent. Brent oil thus costs $83.88 and WTI $81.05 per barrel.
Gold was trading sideways today, without major moves in any direction and closing almost unchanged at $1,753 per troy ounce.
The cryptocurrency market was split today, with the two leading coins, Bitcoin and Ethereum, showing positive signs while most altcoins were losing some momentum. BTC was up 3 per cent to $57,000, and Ether gained 1.2 per cent to $3,515, while Binance Coin held stable at $410. On the other side of the coin, Cardano lost 3 per cent to $2.16, XRp dropped 3.1 per cent to $1.13 and Polkadot lost 3.5 per cent to $33.60. The biggest daily increase in the top 100 coins was seen for Shiba Inu again, rising 12.3 per cent.
Corporate and world economic news
Economic data
The successful measures in the fight against the global corona crisis, the better distribution of vaccines against the coronavirus and the rising inflation rates will be topics at the annual meeting of the International Monetary Fund (IMF) and the World Bank in Washington. According to information from German government circles, the discussion on rising prices should consider the different causes on both sides of the Atlantic.
The discussions of the finance ministers and central bank heads in Washington will be about the fact that there is a clear recovery of the world economy from the economic crisis caused by corona measures. However, this is not equally good in all regions, explained a high-ranking official from the Federal Ministry of Finance, who did not want to be named.
The meeting will also discuss whether the higher inflation rates are only temporary phenomena caused by sharply lower commodity and energy prices during the Corona crisis and are rising sharply again.
The meeting is overshadowed by allegations against IMF chief Kristalina Georgieva that she exerted pressure during her previous role at the World Bank to whitewash a ranking of China in the “Doing Business” report.
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