Markets Update Monday 27/09/2021 – Post Election

Frankfurt – 27/09/2021

Post Election

The Bundestag elections took place in Germany at the weekend. The result reassured many investors as there was no left-wing coalition, which would have been the only scenario that would have had a supposedly negative effect on the stock markets.

Accordingly, there was a big sigh of relief on the Frankfurt stock exchange floor on Monday.

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Investors cannot rule out the possibility that the formation of a government will once again lead to a weeks-long stalemate, as was the case after the 2017 election. But whatever the future new government looks like, investors should never forget that political stock markets have short legs. Regardless of the outcome of the coalition negotiations, however, Germany remains a political safe haven in Europe.

US Markets at a glance

The major indices on Wall Street trended in opposite directions.

The US leading index Dow Jones started the session somewhat weaker but was subsequently able to gain. At times, it even surpassed 35,000 points. It ended the trading session with an increase of 0.21 per cent to 34,869.37 points. The NASDAQ Composite could not get out of the loss-zone and ultimately fell 0.52 per cent lower to 14,969.97 points.

Investors in the US were cautious on Monday, with tech stocks in particular on the sell list. Market participants focused on oil prices, which continued to rise at the beginning of the week. The North Sea oil Brent rose to a three-year high. But the outcome of the Bundestag elections in Germany also moved the US, as they are likely to result in long coalition negotiations.

Far East Markets at a glance

Asian markets were mixed at the start of the week. In Japan, the Nikkei benchmark index closed with a small loss of 0.03 per cent at 30,240.06 points. On the Chinese mainland, the Shanghai Composite fell by 0.92 per cent to 3,579.66 points. The Hang Seng, however, pulled up 0.05 per cent to 24,205.29 units.

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The crisis surrounding the heavily indebted Chinese real estate group Evergrande still weighed on sentiment. The electric car subsidiary of troubled real estate group China Evergrande is warning of liquidity shortages. The company may not be able to meet its financial obligations.

European Markets at a glance

The European stock markets began the new week on a friendly note. The EuroSTOXX 50 opened the trading session on a firmer footing and finally closed 0.17 per cent higher at 4,165.48 points.

Germany’s leading index also started on a positive note and ultimately ended the day up 0.27 per cent at 15,573.88 points. In contrast, the TecDAX fell significantly on Monday after initially rising slightly. Its closing level: 3,844.78 points (-1.5 per cent).

According to the preliminary voting results, the Social Democrats with Olaf Scholz emerged as the strongest party from the Bundestag election. Nevertheless, on election night, Scholz and Armin Laschet of the CDU claimed the job of forming a government. Initially, difficult coalition negotiations are on the horizon.

Forex, gold, oil and crypto

The USA’s robust economic data moved the foreign exchange market just as little as the German parliamentary elections. The euro defended the 1.17 dollar mark in US trading and cost the common currency 1.1705 US dollars in the evening.

Oil prices continued their climb of the past week on Monday. While Brent North Sea oil went up to a three-year high, US crude oil traded at a two-month high. The most relevant reasons for the high oil prices are both strong demand and tight supply. Most recently, a barrel of Brent cost $79.46, $1.36 more than on Friday. At times, Brent prices had risen as high as $79.90, the highest level since October 2018, while WTI oil from the United States increased $1.33 to $75.31. A barrel of WTI had previously cost as much as 75.73 dollars, the highest price since July.

Gold continued to trade within a tight range between $1,748 and $1,760, finally closing at $1,750 per troy ounce.

Cryptocurrencies continued to range in a well-defined area, following last week’s trend. Bitcoin ultimately lost 1.9 per cent to $42,200 per coin, while Ethereum dropped 3.5 per cent to $2,940. Cardano declined by 2.2 per cent to $2.19, XRP remained stable at around $0.93, and Binance Coin lost 2 per cent to $337. Solana was the only coin under the top 10 digital assets that posted a slight gain of 1.3 per cent to $137, while LUNA was the biggest daily gainer amongst the top 20 tokens, rising 6.6 per cent to $36.70. 

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Corporate and world economic news

Economic data

Ifo export expectations for Germany rose to 21.0 points in September from 17.0 in August. “Sentiment has improved in the German export industry,” the Ifo Institute said. “German industrial exports are proving surprisingly robust in the face of the procurement crisis for raw materials and intermediate products.” Export expectations increased in almost all sectors. The most significant increase was reported for the automotive sector. 

New orders for durable goods in the USA rose surprisingly strongly in August. As reported by the US Department of Commerce, orders rose by 1.8 per cent compared to the previous month. Economists surveyed by Dow Jones Newswires had expected an increase of 0.6 per cent. 

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