Markets Update Monday 22/11/2021 – Powell Stays on Top

Frankfurt – 22/11/2021

Powell Stays on Top

The realisation that the old head of the US Federal Reserve is also the new one went down well on Wall Street today. The market responded positively to the nomination of incumbent Fed Chairman Jerome Powell for a second term by US President Joe Biden. His deputy will be Lael Brainard, who was considered his rival in the fight for the Fed chairmanship. The dollar also rose in the wake.

In New York, the technology exchange, in particular, was unable to maintain its opening momentum and slipped into negative territory as the day progressed. In early trading, the Nasdaq 100 index and the S&P 500 index had initially reached new records and thus continued their gains from Friday. Then, however, investors took profits, also because US Treasury Secretary Janet Yellen spooked investors somewhat. 

US Markets at a glance

The US leading index Dow Jones ended today’s session 0.05 per cent higher at 35,619.25 points. The tech index NASDAQ Composite, on the other hand, slipped significantly. After completely giving up its initial gains, it ultimately went deep into the red. It ended the day 1.26 per cent lower at 15,854.76 points.

News from China only temporarily supported the US stock markets. The central bank of the People’s Republic hinted at easing measures to stimulate the economy. US President Biden’s nomination of current Federal Reserve Chairman Jerome Powell for another term was also a talking point. In late trading, investors became more pessimistic as US Treasury Secretary Janet Yellen warned of rising inflation.

Large tech companies such as Apple, Alphabet and Microsoft had marked new record highs only on Friday. At the same time, however, many shares had fallen to new 52-week lows by the end of the week. Apple shares, now valued at about 2.6 trillion dollars, reached another record high of over 165 dollars in the week but fell back with the overall market. In the end, they closed only slightly higher at 161.02 dollars, up 0.29 per cent.

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Far East Markets at a glance

Trading in the Far East was once again divided today. In Japan, the benchmark Nikkei index gained 0.09 per cent to 29,774.11 points, and the Shanghai Composite closed 0.61 per cent higher at 3,582.08 points in mainland China. Bucking the trend, however, was Hong Kong, where the Hang Seng lost 0.35 per cent to 24,961.34 points.

In Japan, the price was supported by the fact that, as expected, the Japanese government has put together an extensive economic stimulus package to support the economic recovery after the corona crisis. The total volume of the equivalent of 431 billion euros also includes cash payments to families and small businesses. Participants, however, spoke of thin turnover in Tokyo ahead of Tuesday’s holiday.

Meanwhile, the People’s Bank of China left the reference rate for bank loans unchanged. However, market strategists say the central bank is likely to lower it soon – probably before the end of the year. The imposition of renewed corona restrictions in many parts of the world justified the Hong Kong cut, which could stall the economic recovery again.

European Markets at a glance

The European stock exchanges presented themselves with negative signs. The EuroSTOXX 50 gained initially and continued to rise, but it went into red territory in the day. In the end, it closed down 0.24 per cent to 4,346.16 points.

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At the start, the DAX index gained slightly and then continued to defend the profit zone. However, the gains became increasingly smaller in the day, and in the early afternoon, red signs could even be seen at times. Although the leading index briefly made it back to the zero line, a minus of 0.27 per cent to 16,115.69 points remained at the close of trading. The TecDAX also gained at the start, but was unable to defend its temporarily more substantial gains, then fell back significantly and closed 1.12 per cent lower at 3,942.21 points.

With a view to the strong greenback and declining commodity prices, traders stressed that this partially affected the exchange rate, supporting exporters. The euro is trading at a low for the year against the dollar, and oil prices and many metal prices are still on a correction course. On the other hand, there was negative news from the economic side: Consumer sentiment in the euro area was worse than expected.

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Forex, gold, oil and crypto

The foreseeable tougher stance of the US Federal Reserve further supported the dollar today, which in turn weakened the euro – and benefited the German export industry, whose order books are full to bursting. The European Central Bank (ECB) set the reference rate at 1.1278 (Friday: 1.1271) US dollars. In US trading, the common currency was again weaker at 1.1237 dollars, a drop of almost half a per cent.

Oil prices rose somewhat in the course of Monday. Speculation about a coordinated release of national oil reserves continues to dominate the market. China has already announced such a step. It is speculated that the USA, Japan and India could follow suit. If this were to happen, four large economies would be fighting against the still-high oil prices. North Sea Brent rose 37 cents to 79.26 US dollars, while WTI crude rose 32 cents to 76.25 dollars. Prices are currently near their lowest level since the beginning of October.

With the strong dollar, the gold price dropped sharply today by 1.8 per cent to 1,805 dollars per troy ounce.

Cryptocurrencies continued to travel in a well-defined range, turning slightly negative today. Bitcoin declined by 2.3 per cent to $56,600, while Ethereum lost 1.8 per cent to $4,150. Similarly, Solana, Binance Coin and Cardano fell by 1-3 per cent, while XRP remained relatively stable at around $1.05. On the other hand, AVAX and Crypto.com moved up 3 per cent against the common trend.

Corporate and world economic news

Economic data

Consumer confidence in the eurozone deteriorated more than expected in November. The index calculated by the EU Commission fell to minus 6.8 points (October: minus 4.8), according to an advance release. Economists surveyed by Dow Jones Newswires had forecast a reading of minus 5.5. The final consumer confidence index reading will be released next week.

In the USA, existing-home sales rose surprisingly in October. They increased by 0.8 per cent month-on-month, as the National Association of Realtors (NAR) announced in Washington on Monday. Economists, on average, had expected a decline of 1.4 per cent. The market is benefiting from high employment growth and low mortgage rates. Projected for the year, the number of sales rose to 6.34 million. This is the highest value since the beginning of the year.

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