Markets Update Monday 28/09/2020 – The Bulls are Back in Town

Frankfurt – 28/09/2020

The Bulls are Back in Town

From the ongoing corona pandemic to the tiresome Brexit negotiations and the US presidential election – there is unlikely to be any shortage of topics of interest to the stock market in the coming weeks. Against this background, it seems a little too optimistic to hope that the flood of money from central banks and technology stocks will keep the stock rally alive. 

Nevertheless, precisely these factors were decisive today in pulling the stock market rudder around and letting prices rise sharply.

However, the statements made by ECB boss Christine Lagarde at a hearing before EU parliamentarians hardly moved the market at all. The economic uncertainty in the eurozone remained high after the economic slump. “The effects of the pandemic are still being felt. Although there had already been a slight recovery in some areas in the third quarter, the risks were still considerable, said Lagarde.

US Markets at a glance

On Wall Street, the mood was positive on Monday, and share prices continued to climb.

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The Dow Jones opened trading with an increase of 0.69 per cent to 27,362.14 points and continued to rise afterwards. In the end, it went up 1.51 per cent to 27,585.64 points. The NASDAQ Composite also started in positive territory and remained in the black. It went out of trading with a plus of 1.87 per cent at 11,117.53 units.

Investors took advantage of the good mood to buy after the month had previously tended to bring losses. However, nothing else changed in the prevailing themes. The focus continues to be on the US presidential elections due in November, the continuing rise in corona infection figures and the ongoing US-Chinese trade dispute.

Far East Markets at a glance

In Asia, the stock markets also rose, supported by positive indications from the US stock exchanges. In Tokyo, the Japanese leading index Nikkei 225 closed 1.3 per cent higher at 23,511 points. The CSI 300, which comprises the 300 most important stocks on the Chinese mainland stock exchanges, increased by 0.4 per cent to 4,589 points on Monday. And the Hang-Seng Index of the Chinese Special Administrative Region of Hong Kong climbed by a good 1 per cent.

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European Markets at a glance

European stock markets recorded strong gains on Monday. The EuroSTOXX 50, for example, rose by a whopping 2.75 per cent, ending the day at 3,223.19 points.

Supported by a further rise in the US stock markets, the Dax on the Frankfurt Stock Exchange also gained substantially. After the losses of the previous week, investors ventured back into the market at reduced prices. This was not necessarily to be expected after last week’s decline, but the bulls returned and pushed the Dax 30 up by 3.2 per cent or 401 points. In the end, the leading German index finished at 12,870 points. The TecDAX also rose strongly by 1.75 per cent, closing at 3,068.27 index units.

The tailwind came once again from Wall Street. However, downward pressure continues to come from the corona pandemic. After all, new infections in several European countries have recently increased sharply, and in some cases, curfews have been imposed again. However, this has not been able to curb investors’ desire to buy today.

Forex, gold, oil and crypto

On the foreign exchange market, the euro exchange rate has recovered to a moderate extent from its recent low since July. In New York, the common currency was last traded at 1.1668 US dollars, slightly higher than at the same time on Friday. 

The Turkish lira, which reached new record lows in trading with the US dollar and the euro, again fell today. Market observers explained the current slide of the Turkish currency with geopolitical risks due to the recent escalation in the conflict region Nagorno-Karabakh between the neighbouring countries Armenia and Azerbaijan. A state of war now prevails between the two nations, with Turkey considered the protective power of Islam-influenced Azerbaijan. Armenia is counting on assistance from Russia.

The commodity market was rather quiet today. Prices on the oil market rose slightly, which caused the price of North Sea Brent, for example, to increase by 36 cents to 42.28 US dollars. American WTI rose by 20 cents to $40.45.

After an initial dip toward $1,850, gold rebounded sharply and managed to close above $1,882 per troy ounce. 

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The main cryptocurrencies around Bitcoin, Ether and XRP remained stable, even though there was negative news about the digital asset exchange KuCoin being hacked. Bitcoin remained virtually unchanged at $10,800, while Ethereum was valued at $355 and XRP at $0.2440.

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What the hack?

Singapore-based cryptocurrency exchange platform KuCoin reported a severe hacking attack over the weekend, where at least $150 million worth of Bitcoin (BTC) and Ethereum (ETC) tokens being withdrawn from secure wallets. Other ERC-20 tokens, which run on the Ethereum network, were also affected. 

As a response to the hack, KuCoin froze the affected user wallets, for the time being, informing all their clients as well as other crypto exchanges of the breach. This fast response helped to keep the overall upbeat market sentiment in the digital asset space alive.

Wirecard goes to Santander?

According to the “Süddeutsche Zeitung”, the major Spanish bank Santander is considered the hottest candidate for the purchase of the core business of Wirecard AG. But nothing has yet been signed. Instead of a sale, the scandalous group’s own financial institution could be threatened with liquidation, the newspaper writes.

Diageo with intoxicating figures

Diageo, the world’s largest spirits producer, has made a good start to its new 2020/21 financial year. The performance of the US business since the beginning of July has exceeded management expectations, and the outlook for the first half of the fiscal year, which ends in December, has improved, Diageo plc announced.

Most of its markets have improved across the board, boosted by the gradual lifting of restrictions imposed by the coronavirus pandemic and strong retail demand, the UK company, which has a portfolio that includes the Johnnie Walker whisky brand and the Tanqueray gin brand, said.

“We continue to expect a sequential improvement in organic net sales and operating profit compared to the second half of the fiscal year,” the company stated. Diageo continues to expect lower organic net sales and margin dilution compared to the same period last year, with Diageo’s share price in London climbing 6.52 per cent to £26.82.

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