Markets Update Thursday 07/11/2019 – Record after record

Frankfurt 07/11/2019

Record after record

The record hunt on the stock markets continues into the next round. The fact that the traffic lights are still green is mainly due to China and the USA.

According to the Chinese government, the USA and China have agreed on a step-by-step reduction of the mutually imposed punitive tariffs. This would be part of a first partial agreement, government spokesman Gao Feng said. The deal is to be signed within the next few weeks. The extent of the tariff reduction depends on the actual content of the agreement, Gao said.

The American side has not yet confirmed this. If the US were to confirm the details, this would be a further step on the way to a more comprehensive agreement.

Investors didn’t really care about this “little detail” and kept pushing the markets higher.

US Markets at a glance

The prospect of a reduction in the punitive tariffs imposed by the USA and China during the trade war has also pushed US stock exchanges to new highs. The Dow Jones reached 27,774.67 points in the course of trading, its highest level ever. The gain amounted to 0.67 per cent – the stock market barometer closed at 27,676.81 points. The Techwerte index NASDAQ Composite also reached a new record high at 8,483.16 points and went into the evening with a plus of 0.28 per cent at 8,434.52 points.

The trading dispute was also the focus of attention on Thursday. In addition, there were again solid data from the US labour market. There, the number of initial weekly applications for unemployment assistance fell somewhat more sharply than expected last week.

Far East Markets at a glance

Asia’s most important stock markets presented themselves with little change and no clear direction on Thursday. Börsianer justified the mixed price development with media reports according to which the signing of the partial trade agreement between the USA and China could be delayed until December. 

The Tokyo leading index Nikkei 225 closed 0.1 per cent higher at 23,330 points. The CSI 300 index with the 300 most important stocks on the Chinese mainland stock exchanges recently gained 0.06 per cent. In the Hong Kong Special Administrative Region, the Hang Seng index dropped 0.37 per cent shortly before the close of trading.

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European Markets at a glance

Europe’s most important stock markets once again performed well on Thursday.

Although the EuroSTOXX 50 was only slightly firmer at the meeting, it was able to increase its gains. It closed 0.49 per cent higher at 3,706.68 points.

The German stock index Dax gained considerably in strength and expanded its share price strongly. At its high for the day, Germany’s leading index briefly pushed above the 13,300 mark (13,300.76 units). At the closing bell, the stock market barometer gained 0.83 per cent to 13,289.46 points. The TecDAX was also able to move further into the profit zone. It closed the day with a plus of 0.9 per cent at 2,933.38 index units.

Forex, gold, oil and crypto

The euro, on the other hand, had to relinquish its short-term gains. By the end of electronic trading in Frankfurt, the common currency had slipped to 1.1046 dollars. In the morning, it had quoted a little higher. The European Central Bank (ECB) set the reference price at 1.1077 US dollars.

Oil prices rose on Thursday as a result of progress in the US-China trade dispute. Most recently, a barrel of Brent crude cost 62.50 dollars. That was 76 cents more than on Wednesday. The price of a barrel of the American West Texas Intermediate (WTI) rose by 87 cents to 57.22 dollars.

The gold price came under enormous pressure during the day, falling below $ 1,460 an ounce at times, but has since recovered somewhat but still remains below $ 1,470 an ounce. 

Prizes of the most relevant digital assets rose slightly bringing the overall market cap to $253 billion. A Bitcoin is currently prized at $9,400. 

Corporate and world news

Münchener Rück expects “loss-carrying quarter

Despite high losses from hurricanes, Münchener Rück earned even more in the third quarter than previously announced. The bottom line was a profit of €865m, as the world’s largest reinsurer announced on Thursday. This was 79 per cent more than in the same period last year and 15 million euros more than the Group had promised in October. “We now expect to exceed our original profit and revenue expectations for 2019 as a whole,” said CFO Christoph Jurecka.

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Despite slump in profits: jump in turnover causes Disney share to rise

Walt Disney presented the figures for the past quarter on Thursday after the close of trading in the US.

Entertainment giant Walt Disney suffered a drop in profits in the past quarter despite successful cinema productions. High special costs and expenses for the expansion of the streaming business squeezed the profit from continuing operations in the three months to the end of September by almost two thirds year-on-year to 785 million dollars (710 million euros). Disney announced this on Thursday after the close of the US stock market.

Disney was able to significantly increase its revenues by 34 per cent to 19.1 billion dollars, also thanks to the acquisition of business units from its rival 21st Century Fox.

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The entertainment giant delivered box-office hits such as “The Lion King” and “Toy Story 4” in the most recent quarter, which led to a massive increase in earnings in the Film division. Business with amusement parks also went well, while the cable segment with the sports channel ESPN, which is suffering from a loss of users, generated less profit.

However, as in the previous quarter, the balance sheet suffered from the high investment costs for the streaming service Disney+, for example, which is scheduled to start on November 12 and compete with the market leader Netflix. Disney also had to digest further high integration costs due to the acquisition of large parts of the Fox Group. CEO Bob Iger was nevertheless satisfied and spoke of “solid results” reflecting the strength of Disney’s business.

Despite the sharp drop in profits, the figures were better than expected. This was well received by investors, with the NYSE stock up 3.94 per cent to $138.20. Since the beginning of the year, the share price has risen by a good 21 per cent.

Toyota shines

Toyota is one of the few automobile groups to defy the global industry crisis. In the period from July to September, the operating result climbed by 14 per cent to 662 billion yen (equivalent to around 5.5 billion euros). According to the company, it was the strongest second quarter in four years. The group benefited from a sharp rise in global sales figures and improved its profitability, particularly in North America. Toyota also increased its sales in China, where other manufacturers are struggling with the trade dispute with the USA, thanks to new models. The Executive Board led by Group CEO Akio Toyoda reaffirmed the subdued profit outlook of a few months ago but lowered the sales target for the current fiscal year to the end of March 2020 by 30,000 units to 10.7 million vehicles.

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This means that the world’s second-largest automotive group after Volkswagen is once again proving to be more robust than many of its competitors.

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