Frankfurt – 26/07/2021
The stock market week on Wall Street has begun as the old one ended: with new records. Not all international stock exchanges were able to keep up, but optimism continues to spread on the trading floor. However, investors have been rather cautious ahead of the eagerly awaited quarterly figures of the tech giants.
China continues to be the current sentiment killer for the markets and especially for China tech stocks. The government in Beijing has unsettled investors with its reform of the private education sector. Accordingly, companies that offer school teaching programmes are not allowed to make profits or go public. What this means in plain language for companies like Tal Education, the leading online teaching portal in the Far East, is not yet clear at this stage. What is clear, however, is that the share prices of Tal and its competitors continue to plummet, having already fallen by 75 per cent in some cases at the end of last week.
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Investors also turned their attention to the electric car manufacturer Lucid, which will be traded on the NASDAQ for the first time on Monday. The Tesla competitor’s IPO was conducted with a corporate shell.
US Markets at a glance
On Wall Street, the initial caution turned into subtle optimism. The Dow Jones opened the session marginally weaker and worked its way slightly higher. In the end, it gained 0.24 per cent to 35,144.31 points. The NASDAQ Composite ended 0.03 per cent higher at 14,840.71 points after starting the day slightly lower.
Investors were pleased with the positive start to the reporting season so far. But now, the pace of economic growth and inflation are causing some concern, the market said.
This week’s agenda includes quarterly figures from major American technology companies such as Apple, Microsoft and Alphabet. Today after market close, US electric car manufacturer Tesla already presented its figures for the past quarter.
Far East Markets at a glance
The Asian stock markets did not find a common denominator today. The Japanese benchmark index Nikkei climbed 1.04 per cent to 27,833.29 points after the long weekend. Due to public holidays, the last trading day in Tokyo was last Wednesday. On the Chinese mainland, the Shanghai Composite lost 2.34 per cent to 3,467.44 index points. Meanwhile, the Hang Seng in Hong Kong fell 4.13 per cent to 26,192.32 points.
In Japan, positive guidance from Wall Street and hopes of strong quarterly results from companies in the just-begun reporting season drove gains. Measures taken by regulators caused a downbeat mood in China. The online education sector and apparently a further regulation of the real estate sector in China are being discussed in government circles.
European Markets at a glance
At the beginning of the week, the European stock markets went down.
The EuroSTOXX 50 recorded a small minus of 0.16 per cent to 4,102.59 index units at the close of trading.
In particular, the waning economic optimism in the German economy dampened the mood of DAX investors. The DAX ended the session with a moderate minus of 0.32 per cent at 15,618.98 points, and the TecDAX also ended the day 0.65 per cent lower at 3,644.42 points.
Rising corona-positive figures in the European region caused concern among investors. And further increasing government regulation of the Chinese private sector also weighed on sentiment. In addition, investors were cautious ahead of the Fed’s monetary policy decision on Wednesday, the market said.
Meanwhile, the start of the financial reporting season gathered momentum. Philips and Ryanair, for example, opened their books.
Forex, gold, oil and crypto
The euro managed to climb above the threshold of 1.18 US dollars in the foreign exchange market. The German Ifo economic index, which fell short of expectations, initially halted the recovery of the common currency and pushed it back to Friday’s level of 1.7770 dollars. However, the euro was boosted in the afternoon by disappointing figures from the US housing market. New home sales in the United States fell for the third consecutive month in June, putting pressure on the greenback.
Oil prices fell slightly at the start of the week, losing some of their gains from the previous trading days. Most recently, a barrel of Brent cost 73.91 US dollars, 20 cents less than on Friday. West Texas Intermediate fell 48 cents to 71.60 dollars. Earlier, oil prices had come under more significant pressure, with prices slipping by more than a dollar at times.
Meanwhile, the gold price slipped below $1.800 an ounce again intraday before holding $1.802 an ounce in the end.
Cryptocurrencies continued their upward trend, which started at the end of last week and accelerated the rally even further. Bitcoin shot up from $34,400 to scratch $40,000 within minutes before consolidation set in. Bitcoin now needs to break a tough resistance line between $40,000 and $41,000, but, for now, everything seems set for Bitcoin and co to rally further in the coming days. Bitcoin ended the day at $38,000, while Ethereum made it to $2,180.
Corporate and world economic news
The mood in the German economy has surprisingly clouded over in July. The Ifo index for the business climate fell by 0.9 points to 100.8 points, as the Munich-based institute announced on Monday. The decisive factor for the decline in the assessment of the future business. Here the corresponding index value declined, while the evaluation of the current situation was again better.
Contrary to expectations, the mood in the executive suites of the German economy also clouded over in July. The Ifo Business Climate Index fell to 100.8 (June revised: 101.7) points, as the Munich-based Ifo Institute announced. Economists surveyed by Dow Jones Newswires had expected an increase to 102.5 points. The preliminary figure for June was 101.8 points.
New home sales in the US have fallen sharply again. New home sales fell by 6.6 per cent month-on-month in June, according to the Commerce Department in Washington on Monday. It was the third drop in a row. Analysts, on the other hand, had expected a 3.5 per cent increase. In addition, the setback in May was more substantial than previously known. The ministry revised the month-on-month decline to 7.8 per cent. Previously, a minus of 5.9 per cent had been reported.
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