Markets Update Monday 29/06/2020 – Zick-zack

Frankfurt – 29/06/20

Zick-zack

The overriding factor is that the global stock markets are caught between high numbers of new infections, especially in the USA and the hot spots that pop up all over the world from time to time, and hopes for a rapid recovery from the economic crisis. Who will have the better end for himself, in the end, remains unclear.

Today, after a mellow start, the European and US indices picked up the pace during the New York session and ended the day on a positive note. 

US Markets at a glance

 After the significant losses prior to the weekend, the US markets rebounded on Monday, supported by surprisingly robust economic data. In May, the US housing market recovered more strongly than expected from the Corona crisis. 

The US leading index, the Dow Jones, opened with a gain of 0.55 per cent at 25,152.45 points and then continued to climb. Ultimately, it increased by 2.32 per cent to 25,595.05 units. The NASDAQ Composite was temporarily down after a 0.15 per cent firmer start at 9,771.72 points. At the end of trading, however, it gained 1.2 per cent to 9,874.15 index points.

Far East Markets at a glance

In Asia, stock markets fell across the board due to fears of a second corona wave and weak US data from last week. 

Japan’s leading index, the Nikkei 225, ended trading at 21,995 points, down 2.3 per cent, making its moderate gain from the previous week history. The stock exchanges in South Korea and Australia also recorded pronounced losses on Monday. In Mumbai, India, the downward trend was a somewhat more moderate 1.3 per cent.

On the Chinese mainland, the Shanghai Composite ended Monday trading 0.61 per cent lower at 2,961.52 index points. In Hong Kong, the Hang Seng finally dropped 1.01 per cent to 24,301.28 points. In addition, the “Law for the Protection of National Security” planned by China and sharply criticized in many parts of the world remained in the spotlight. The citizens of Hong Kong see this as a growing threat to the autonomy of the Special Administrative Region.

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European Markets at a glance

Europe’s markets finally showed a stronger performance on Monday. The EuroSTOXX 50 was lighter at first when the starting bell sounded and then set off in search of direction. In the afternoon, it was able to turn into the plus and maintain its positive trend. In the end, the index rose by 0.87 per cent to 3,232.02 points.

The Dax 30 began the new week almost unchanged at 12,090.41 points. After a volatile trading session in the morning, however, it settled into positive territory and was able to further expand its gains over the course of the week. It ended trading 1.18 per cent stronger at 12,232.12 points, thus defending the important 12,000 point mark. The TecDAX was weaker. It ended the day down 0.48 per cent at 2,897.93 points.

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The Wirecard share led the list of winners in Germany’s leading index with a percentage gain of 154 per cent to 3.26 euros – but this does not mean much. After the collapse of the share in the wake of the accounting scandal, such unnatural fluctuations are always possible at a low level. Nevertheless, the share remains no more than a pinball of the markets and today benefited from speculation about the continuation of the operative business.

Forex, gold, oil and crypto

In the forex market, the euro held steady in a volatile trading session above $1.12 on Monday. In US trading, the common currency last traded at $1.1234, slightly higher than in the Asian session. At times, the euro had risen toward $1.13, but was unable to hold on to its gains. 

Oil prices are also rising in line with the rising stock markets. Initial declines were more than offset by the evening. A barrel of North Sea Brent is currently trading 60 cents higher than Friday at 41.53 US dollars. The price for a barrel of the American variety West Texas Intermediate (WTI) rose by 76 cents to 39.25 dollars.

The gold price remained at a high level and closed almost unchanged at $1,772 per troy ounce.

The cryptocurrency market continued its consolidation phase at approximately $260 billion. A Bitcoin is traded at $9,120, Ethereum at $228 and XRP holds at $0.1777. 

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Corporate and world news

Chesapeake Energy files for insolvency

US fracking pioneer Chesapeake Energy filed for creditor protection on Sunday due to the sharp drop in energy prices. 

The company wants to reorganize the capital structure of the highly indebted company under the protection of Chapter 11 of the US Bankruptcy Code, CEO Doug Lawler announced in Oklahoma on Sunday. Chesapeake is sitting on a mountain of debt worth billions. The decline in natural gas and oil prices as well as a supply surplus as a result of the fracking boom are weighing on the company’s business. The corona crisis has caused demand to collapse.

In recent years, Chesapeake had also entered the shale oil business. But here, the double shock from the corona crisis and the price war between Russia and the oil cartel Opec weighed on the market in the past month. The price of the American oil grade WTI even slipped into negative territory at times in April due to tight storage capacities. Not only Chesapeake, but the entire fracking industry was hit hard by the corona crisis: This year, at least 20 oil and gas producers in the USA have already filed for bankruptcy.

The Chesapeake Energy share ultimately lost 7.28 per cent to 11.85 US dollars on the NYSE.

Flatex sponsors Borussia Mönchengladbach in future

The online broker Flatex replaces Postbank as the new main sponsor of the German Bundesliga football club and Champions League participant Borussia Mönchengladbach. The partnership is to be officially announced today, Monday. It will bring the traditional club around ten million euros, according to club sources. The Postbank, which adorned the Gladbachers’ jersey for eleven years, had paid up to seven million. Flatex papers are on the rise.

Coty makes a move on Kim Kardashian

US cosmetics company Coty is teaming up with reality TV star Kim Kardashian West.

The company, which is majority-owned by the German billionaire family Reimann, announced on Monday in New York that it will acquire a 20 per cent stake in West’s make-up company KKW Beauty. Coty is putting up 200 million dollars (177 million euros) for the deal, which is valued at one billion dollars. This means that Kardashian West will have to be content with slightly less than its half-sister Kylie Jenner, whose company Coty valued at $1.2 billion when it entered the market in January.

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The partnership is creating a positive mood on the stock market on Monday, with Coty shares rising about 15 per cent at times in New York trading. At the close of trading, they were still 13.28 per cent higher at 4.74 US dollars. Cooperation with celebrities is currently very popular with US companies. It was only on Friday that the fashion brand Gap announced a deal with Kardashian West’s husband, rap star Kanye West, and was also celebrated by investors on the stock exchange. 

However, the euphoria in the market cannot hide the fact that both Gap and Coty are actually in deep crisis.

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