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Frankfurt – 18/11/2019
Are we there yet?
Doubts about an imminent trade deal between China and the USA and the fear of US punitive duties on German cars spoiled investors’ buying mood on Monday.
US President Donald Trump did not comment on the trade dispute with China on Monday, nor on possible car tariffs on European cars. But the silence of the mighty man in the White House was enough to bring investors to the side. Uncertainty once again dominated the markets.
US Markets at a glance
On Wall Street, despite new all-time highs at the beginning of the week, there was restraint.
The Dow Jones opened with a small minus and continued to move slightly up. At the end of trading, the stock market barometer climbed by 0.11 per cent to 28,035.75 points – in the day it had reached a new record high of 28,040.97 points. Also, the NASDAQ Composite rose by 0.11 per cent to 8,549.94 points after an all-time high of 8,559.78 points. The market-wide S&P 500 declined by 0.2 per cent.
Far East Markets at a glance
In Asia, the stock markets started the week friendly with moderate gains – despite continuing unrest in Hong Kong.
In Japan, the Nikkei gained 0.49 per cent to 23,416.76 points on Monday. On the Chinese mainland, the Shanghai Composite finally recorded a gain of 0.62 per cent to 2,909.20 points, while the Hang Seng in Hong Kong gained 1.35 per cent to 26,681.09 units.
Surprisingly, the index that rose the most was in the Chinese Special Administrative Region in particular, although protests escalated again over the weekend. The local government in Hong Kong is also expecting a deep recession. Some traders are lingering on the surprising rate cut by the Chinese central bank because of rising prices. The People’s Bank of China (PBOC) reduced its seven-day reverse repurchase rate, lowering the cost of short-term open market operations.
European Markets at a glance
Bears dominated the majority of Europe’s equity markets on Monday.
The EuroSTOXX 50 had presented itself as almost unmoved to the sound of the starting bell and gave way in the further course of trading. Finally, he ended the day 0.18 per cent lower at 3,704.92 units. The DAX had opened somewhat more firmly but then lost ground, closing 0.26 per cent lower at 13,207.01 points. The TecDAX was able to keep in the profit zone after a friendly start driven by QIAGEN. In the end, the index rose by 0.67 per cent to 3,019.01 points.
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The stock markets thus continued their consolidation. Investors are still sceptical about the negotiations on the Sino-American trade dispute. The doubt that an agreement will be reached quickly, as China has made the dismantling of punitive tariffs a condition for an agreement, continues to linger.
Forex, gold, oil and crypto
The euro strengthened slightly in US trading on Monday. The European common currency, the euro, was traded recently at 1.1074 US dollars. The European Central Bank (ECB) had set the reference rate at 1.1061 (Friday: 1.1034) dollars. The euro received positive impulses from disappointing US economic data. On Monday, data from the US housing market for November fell short of expectations. No important economic data was released in the euro-zone.
Oil prices fell sharply on Monday. One barrel of Brent crude from the North Sea cost 62.09 US dollars most recently. That was 1.19 US dollars less than on Friday. The price for a barrel of West Texas Intermediate (WTI) fell by 1.07 dollars to 56.66 dollars. After there had been positive tones in the past few days, especially from the USA, with a view to a planned first trade agreement between the United States and China, the latest news development clouded demand for crude oil.
Gold prices rose significantly late Monday after initially recording heavy losses. Not only doubts about the hoped-for trade agreement made the safe haven of gold more attractive for buyers again, but also a report confirming a secret meeting between Donald Trump and Fed chief Jerome Powell. The precious yellow metal closed the evening at $1.471.
And finally, digital assets recorded further losses on Monday with Bitcoin moving closer to $8,000, Ethereum trading at $180 and XRP at $0.25. What caused the sudden downward trend is not clear, but looking at the charts, we can identify a downward channel that needs to be broken before we can anticipate the bulls taking over again.
Corporate and world news
Takeover battle for the Madrid Stock Exchange
The European stock exchange industry is facing a takeover battle worth billions. The SIX Swiss Exchange offers 2.8 billion euros for the Madrid Stock Exchange (BME). At the same time, the Euronext exchange is also boasting about the BME. If the Swiss had a chance, they would displace Deutsche Börse as number three in Europe. “This is the right deal at the right time,” said SIX CEO Jos Dijsselhof. The European market leader is the London LSE – ahead of Euronext. Madrid Stock Exchange shares climb by almost 40 per cent to a four-year high of 35.50 euros.
Aramco IPO also fills Swiss coffers
The planned IPO of Saudi Arabian oil company Saudi-Aramco should also pay off for Credit Suisse. As the “SonntagsZeitung” writes on the basis of several people involved in the IPO at the weekend, the transaction could generate commission income of 100 million US dollars for the major Swiss bank.
The fact that the bank has been given a significant role is mainly due to Tidjane Thiam. According to the report, the company’s CEO had set up the deal with the Arabs.
Coty buys cosmetics company from Kylie Jenner
The cosmetics group of the German billionaire family Reimann focuses on younger customers and buys the majority of the beauty empire of influencer Kylie Jenner for 600 million dollars. The 22-year-old is the sister of Kim and Kourtney Kardashian and has been marketing make-up and skincare products under the Kylie Cosmetics brand since 2015. According to Coty, it has earned 177 million dollars in the past twelve months. According to Forbes magazine, Jenner was the youngest self-made billionaire in 2018. Coty has long suffered from the failed acquisition of Wella and other cosmetics brands from consumer goods giant Procter & Gamble.
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