Markets Update Monday 17/08/2020 – Go, Go, Gold!

Frankfurt – 17/08/20

Go, Go, Gold!

Today, there were extremely few impulses from companies and the economy as a whole. Except for a few mediocre economic data releases such as the New York Empire State Manufacturing Index, the economic calendar was empty today. Therefore, traders and investors were mostly focused on political and socio-economic factors, which ultimately lifted the gold price back up close to the $2,000 mark again.

Tensions between China and the US continue to weigh on the otherwise upbeat sentiment, which is further fuelling the share price rally – at least in some regions and mainly a select group of stocks. 

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On the other hand, the corona news continues to be negative – or at least being negatively received by many – even though there is an unbelievable lack of real data and information surrounding the topic. An example of the one-sidedness in information is the infection numbers reported from Germany. Since there are testing stations for returning holidaymakers at pretty much every border, the apparent infection numbers are rising again. 

How this comes as a surprise and puts fear in governments and people around the globe after increasing testing by many multiples speaks louder than even other facts which continue to be ignored almost entirely. There are, daily, reports of infection numbers and “corona-death” figures, but rarely is there any useful and truthful data. Essential questions like “how many people actually died JUST because of corona (there are some studies which point to zero)?” or “how many infected people have which symptoms – if any?” are pretty much never respected, acknowledged and discussed.

So, the madness and unprecedented measures can continue…

US Markets at a glance

Wall Street’s stock exchanges moved in different ways today.

The Dow Jones closed at 27,844.91 points with a loss of 0.31 per cent while the NASDAQ Composite technology index even rose to a new record high. In the end, driven by the Tesla share price soaring, it closed 1.00 per cent up at 11,129.73 units.

Due to the holiday season and a lack of price drivers, traders spoke of a quiet trading day. The main topic of discussion continued to be the political tensions between China and the US, which are continuing to weigh on the overall upbeat sentiment.

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On the corporate side, the news was thin, and on the economic data front, the Empire State Manufacturing Index for August was published even before the stock market started, which dropped to 3.7 points from 17.2 in July. 

Far East Markets at a glance

On Asian stock markets, the start to the new week was mixed.

In Tokyo, the Nikkei closed 0.83 per cent lower at 23,096.75 points.

On the Chinese mainland, the Shanghai Composite experienced a strong upward trend: At the end of trading, the index was up 2.34 per cent to 3,438.80 points. Investors in Hong Kong were also in a buying mood: the Hang Seng finally climbed by 0.65 per cent to 25,347.34 points.

The Chinese central bank provided fresh liquidity with another cash injection, which benefited the Chinese stock market at the start of the week. However, the meeting between representatives of the US and China planned for Saturday was postponed at short notice and without a new date, but did not burden the stock markets.

In Japan, the current GDP figures were the main focus of attention and depressed sentiment. GDP collapsed at a record pace in the second quarter, more sharply than experts had expected.

European Markets at a glance

European markets had a cautious start to the new week. The EuroSTOXX 50 closed almost unchanged at 3,305.65 index units. 

The German stock market made a minimal gain, and the Dax 30 closed 0.15 per cent stronger at 12,920.66 points. The TecDAX gained just 0.1 per cent to 3,083.16 units.

Because of rising infection figures and new travel warnings within the EU, investors on the European stock exchanges held back at the start of the week. The US and Asian markets were not able to provide strong impulses for the European Session today.

Forex, gold, oil and crypto

The euro exchange rate gained somewhat on the foreign exchange market. Market observers pointed to disappointing US economic data, which put pressure on the dollar and in turn boosted the euro. After these were released, the common currency reached a daily high of $1.1881.

Oil prices on the commodities market rose today. After initially slipping into negative territory, they managed to return to profitability and remained close to their daily highs. A barrel (159 litres) of North Sea Brent crude cost $45.17, 37 cents more than on Friday. The price of a barrel of the US oil type West Texas Intermediate (WTI) rose by 54 cents to $42.55.

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The price of gold came back on track today, and in the day could climb up to $ 1,985 an ounce. During the Asian session, it fell to $1,930 an ounce, which means that it gained a solid $50 during the day. Silver also gained momentum again and rose from a low of just under $26 to $27.70.

Similarly, cryptocurrencies rallied again today. Bitcoin rose by over 3.5 per cent to now $12,200, while Ethereum only increased by 0.8 per cent to $431. XRP’s value increased by 4.8 per cent to $0.3160. 

Corporate and world news

Economic data

The week began with second-quarter GDP data, as well as industrial production and capacity utilisation figures from Japan. The gross domestic product (GDP) of the world’s third-largest economy fell in the second quarter of this year, projected for the year as a whole, by 27.8 per cent in real terms, the government in Tokyo announced this morning on a provisional basis. Japan had already shrunk in the two previous quarters and is thus in recession. Economists had expected the slump to be much more severe this time. In the current quarter, they expect a distinct upswing again.

Tesla at record high – again

The shares of the e-car manufacturer will continue their triumphant advance on Monday. In New York on the Nasdaq technology exchange, the share price rose above the $1,800 mark for the first time and currently marks a new record high at 1,805 US dollars. The market capitalisation is thus over 323 billion US dollars, higher than that of any other automobile manufacturer in the world. According to dealers and traders alike, the Tesla share continues to receive a tailwind from the fact that the electric car manufacturer’s papers are soon to be split – to make them more interesting again for small investors at their high level.

Google criticises Australian media law

Google has criticised the Australian government’s plans for a new media law and warned of the loss of free access for internet search. In an open letter on Monday, the company vehemently opposed Australia’s plans to make Google, Facebook and other internet giants pay for news they take over from traditional media in the future. The US company warned that this could “dramatically worsen” searches on Google Search and YouTube for Australian users.

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