Markets Update Thursday 02/07/2020 – Apprehensively positive

Frankfurt – 02/07/20

Apprehensively positive

According to the latest figures from the US labour market, the economic situation does indeed appear to be brightening up more and more. Although nothing is as it was before the crisis, more and more market experts at least see the light at the end of the tunnel. Today, this and also positive news regarding a corona vaccine once again drove the stock markets strongly. 

Still, the markets remain torn between hopes that this type of speedy economic recovery will continue and the fear that a second wave of the coronavirus may spread and shake the markets once again. 

At least in the USA there is always reason for nervousness. For despite the price fireworks today, the situation remains extremely tense, so that the price gains are not set in stone. The number of new infections is currently continuing to rise sharply, most recently by over 50,000 people per day for the first time. The leading US immunologist Anthony Fauci had already warned on Tuesday that there could soon be 100,000 new infections a day. The USA was moving in the wrong direction.

So the economic euphoria may soon be pushed back again, especially as the upcoming long holiday weekend in the USA traditionally brings families together. There could be “a perfect storm” brewing, the CNN station quoted a doctor for infectious diseases as saying. Another issue is that people do not always adhere to hygiene regulations.

US Markets at a glance

The US leading index Dow Jones rose by 0.78 per cent to 25,936.45 points initially and continued to climb during the day, but gave up some of its gains. By the end of trading, a plus of 0.36 per cent had remained on the price board at 25,828.45 units. The NASDAQ Composite also had a friendly start and entered the long weekend 0.52 per cent higher at 10,207.63 index units.

Due to tomorrow’s holiday, the US stock exchanges will remain closed, and non-farm payrolls were exceptionally published on a Thursday. The number of non-farm payrolls rose by 4.8 million in June, well above expectations at 3.2 million. The unemployment rate dropped to 11.1 per cent from 13.3 per cent in the previous month. A figure of 12.5 per cent had been expected. The corona inflicted decisions have turned full employment into mass unemployment in the USA: More than 20 million citizens lost their jobs in April before a trend reversal began in May when around 2.5 million jobs were created.

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In terms of individual stocks, Tesla again moved into the focus of investors. The e-car manufacturer was able to surprise with its delivery figures for the second quarter positively.

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Far East Markets at a glance

Asian markets were friendly today. In Tokyo, the Nikkei was ultimately up 0.11 per cent to 22,145.96. Meanwhile, on the Chinese mainland, there was a more pronounced upswing: the Shanghai Composite climbed 2.13 per cent to 3,090.57 units. In Hong Kong, the Hang Seng finally gained 2.85 per cent to 25,124.19 points.

The friendly Wall Street supported the positive environment, but the tussle between the US and China regarding Hong Kong is still weighing on the markets. 

European Markets at a glance

At the end of the day, the EuroSTOXX 50 was 2.84 per cent higher at 3,320.09 index units. 

The Dax 30 was already on green ground when the starting bell sounded and then continued to climb, leaving the 12,600-point mark behind. It ended today’s rading day with a plus of 2.84 per cent at 12,608.46 points. The TecDAX also opened firmer and maintained its positive trend in the further course of trading. In the end, the index gained 1.25 per cent to 2,999.65 points.

In addition to the positive US labour market data, reports from Pfizer and BioNTech on a vaccine candidate against the COVID 19 virus also gave rise to a friendly mood – this awakened risk appetite on the stock market. 

Forex, gold, oil and crypto

Good prospects for the US economy weighed on the euro on the Forex market. The common currency had at times risen above the USD 1.13 mark in European business but was unable to maintain its gains. After a daily high of 1.1303 US dollars, the euro exchange rate fell back to 1.1231 US dollars.

In the commodities market, oil prices rose on Thursday in the wake of friendly stock markets. The barrel (159 litres) of North Sea Brent rose 71 cents to $42.74. The price of a barrel of US West Texas Intermediate (WTI) rose 55 cents to $40.37.

In a volatile US trading session, gold managed to rise back above $1,773 after it dropped sharply to $1,759. The release of the US non-farm payroll figures always have a high impact on the safe-haven currency against the US dollar. However, this time, the sharp drop in price was followed by a steep recovery. Investors are keeping gold bid because of the continuing uncertainty in the market. 

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Cryptocurrencies suffered a knee-jerk sell-off today before digital assets found their feet again. Bitcoin is currently hovering above $9,100, while Ethereum is back at $227 and XRP at $0.1770. One of the biggest gainers in the digital assets class was the Chinese smart contracts project VeChain with a daily gain of 6.95 per cent to currently $0.01. On the weekly chart, this means a 12.25 per cent gain for the Ethereum competitor. 

Corporate and world news

Tesla share climbs to new record high

The record rally of Tesla, now the most valuable car manufacturer on the stock exchange, continued on Thursday in a market environment that remained friendly.

Following a positive surprise in the second quarter delivery figures, the shares of the electric car manufacturer shot up at times to a new record high of $1,228 on the NASDAQ, the best value in the technology-oriented selection index NASDAQ 100. At the end of trading, the share was still up 7.95 per cent at $1,208.66. This resulted in market value of around 207.66 billion US dollars for Tesla.

Positive quarterly results and high market capitalization are meanwhile prerequisites for Tesla to be included in the most important US share index, the S&P 500. This would give more attention to the shares and could further drive the rally.

New York Stock Exchange enjoys Lemonade

The Insurtechs are stirring up the classic insurance industry. Today, the insurance start-up supported by the Japanese tech investor Softbank starts trading on the New York Stock Exchange. It wants to become the “most beloved insurer in the world”. Lemonade has set the issue price at 29 dollars, above the recently raised range of 26 to 28 dollars. The company is thus valued at 1.6 billion dollars – significantly less than the 2.1 billion dollars in last year’s financing round.

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