Markets Update Monday 14/10/2019 – That hangover feeling…

That hangover feeling…

Hangover mood after the big stock market party on Friday: The high flight on the stock markets ended abruptly at the beginning of the week. 

Was the anticipation of a partial settlement in the trade dispute between the USA and China premature? Many experts had warned about being too optimistic too early about the current trade talks. The Beijing government dampened hopes for a quick deal on Monday and investors took cover straight away.

Beijing, of all places, raised doubts that the announced partial settlement between China and the USA would come about. According to a media report, the government still sees a need for talks in Beijing before signing phase one of the trade agreement announced by US President Donald Trump on Friday evening. “It wasn’t a real deal anyway,” said Neil Wilson, chief analyst for online broker Markets.com. “What is worrying for the markets is that the US and China describe the agreement in different words. This suggests that progress in the talks is manageable.”

Investor sentiment was also affected by the faltering Brexit negotiations on Monday. Over the weekend, EU leaders criticised British Prime Minister Boris Johnson’s less detailed plan. Although the EU Commission called the talks constructive, it also stressed that “there is still a lot of work to be done.”

US Markets at a glance

In the hope of an American-Chinese trade agreement, investors on Wall Street have already distributed plenty of advance laurels on Friday. After a few statements on the agreement, it lacked the strength for further price gains. Although the Dow Jones Industrial briefly surpassed the 27,000 point mark for a short time, this brought it back into sight of its July record high of 27,398 points. At the end of the trading day, however, it only maintained a gain of 1.2 per cent to 26,816 points.

Far East Markets at a glance

Spurred on by the partial agreement in the trade dispute between the USA and China, the Asian stock exchanges have started the new trading week mainly with profits. Given the progress made in the negotiations, even the Chinese foreign trade data, which was weaker than expected due to the trade war, could not noticeably dampen sentiment.

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While the Japanese stock exchange remained closed due to a public holiday at the start of the week, the CSI 300 with the 300 most important shares on the Chinese mainland stock exchanges rose last Monday by 1.1 per cent to 3,955 points. The Hang Seng Index in Hong Kong recently rose by 0.9 per cent to 26,555 points.

European Markets at a glance

On the other European stock exchanges, prices did not come off the mark. The EuroStoxx50 lost 0.4 per cent. Germany’s leading index, the Dax, closed 0.2 per cent lower below 12,500 points, having shot up by almost three per cent on Friday. 

Forex, gold, oil and crypto

Speculation about a further cooling of the global economy, on the other hand, depressed the price of Brent crude oil from the North Sea by two per cent to 59.25 dollars per barrel (159 litres). The surprisingly sharp decline in China’s foreign trade in September matched this picture. 

Investors were increasingly heading for “safe havens” as a result of uncertainty. The “anti-crisis currency” gold, for example, rose by up to 0.5 per cent to 1,496.20 dollars per troy ounce (31.1 grams). The demand for German government bonds caused the yield on ten-year securities to fall from minus 0.438 per cent to minus 0.482 per cent.

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The cryptocurrency market appreciated slightly on Monday. It was again the digital asset XRP that stood out from the top 10 cryptocurrencies, appreciating by almost 5 per cent to $0.2910. Some analysists believe the continuous price increase of XRP is due to the upcoming, annual Swell conference hosted by the company Ripple, which is trying to utilise the digital asset globally. 

Bitcoin and Ethereum, the number 1 and 2 cryptocurrencies by current market cap, increased only slightly in price. One Bitcoin currently costs $8,350, and one Ethereum token is worth approximately $186.  

Corporate and world news

Trump’s sanction threat: Turkish stock market buckles

The US threat of severe sanctions against Turkey makes investors nervous. The leading index of the Istanbul Stock Exchange lost 2.6 per cent on Monday. The bonds of the southern European country also flew out of the portfolios. This drove the yield on ten-year securities up by around one percentage point to 15.42 per cent. The selling pressure on the Turkish currency made the dollar and the euro more expensive by about half a per cent to 5.9155 and 6.5358 lira, respectively.

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Last week Turkey launched a military offensive in Northern Syria. Shortly before the start of the offensive, Trump had ordered the withdrawal of US soldiers from the area in north-eastern Syria.

IMF Annual Meeting

Trade conflicts and weaker economic growth overshadow the annual meeting of the International Monetary Fund (IMF) and the World Bank, which begins today. Finance ministers, central bankers and heads of major banks will discuss the further development of the global financial and economic system at the one-week meeting. The challenges are as diverse as development policy, trade conflicts, climate change and international financial stability.

Hellofresh tables up even more turnover

The strong demand for cooking boxes continues: After a surprisingly positive third quarter, food supplier Hellofresh is raising its sales forecast for the year as a whole. Currency-adjusted sales are expected to rise by around 31 to 33 per cent in 2019. Previously, a plus of between 28 and 30 per cent was targeted. In the third quarter, sales should be between 438 and 441 million euros and adjusted operating earnings (EBITDA) between 13.5 and 15.5 million euros. Hellofresh shares gained six per cent in late trading.

Facebook make-up

The social network wants to improve its image in Germany with an elaborate advertising campaign. On Monday, the network published the first TV commercials and print ads with stories of people who connect, exchange and support each other in Facebook groups. “This is the biggest Facebook advertising campaign in Germany,” said Ineke Paulsen, Head of Marketing for Central Europe.

The “More Together” campaign is already running in the USA and Brazil. Facebook is thus trying to put the actual functions of the network in the foreground and draw a line under scandals of the past.

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