Frankfurt – 11/02/2021
Smoked out
After yesterday’s course rally in cannabis stocks, today’s sobering comedown occurred. Cannabis industry giants Tilray, Aurora Cannabis, Canopy Growth, Aphria and Cronos all dropped in multiple double-digits, Tilray even by almost 50 per cent on the day. Of course, the selling spree was mainly triggered by profit-taking after the strong rally on Wednesday, but it may also well be that traders have found yet another playing ball in the financial markets for the time being.
Other than that, Jerome Powell dispelled the spectre of inflation during his virtual appearance at the Economic Club of New York – and reassured investors. The Fed chief brushed aside warnings from several economists that a billion-dollar stimulus package in the US would lead to more inflation. If price stability is threatened, the Fed could take countermeasures, he stated.
Powell also stated that the US labour market’s recovery had come to a standstill in recent months. However, due to the very high degree of uncertainty, a withdrawal of monetary policy support cannot be thought of until the pandemic is over, the Fed President explained.
US Markets at a glance
The US stock markets again showed no consistent direction on Thursday. The Dow Jones opened slightly higher and reached a new high. However, as it progressed, the US leading index then fell below the zero line and closed with a slight discount of 0.02 per cent at 31,430.90 points. The NASDAQ Composite closed with an increase of 0.38 per cent at 14,025.77 points.
After two trading days of consolidation, the US stock market was divided on Thursday. Hopes for a new trillion-euro stimulus package from the new government continued to support market sentiment.
On the corporate side, the focus continued to be on the presentation of quarterly figures. PepsiCo presented its balance sheet for the past quarter in the pre-market, and Uber had already presented its figures the day before.
Far East Markets at a glance
Trading on most of the important Asian markets was suspended on Thursday due to public holidays. The Japanese benchmark index Nikkei ultimately gained 0.19 per cent to 29,562.93 points on Wednesday.
On the Chinese mainland, the Shanghai Composite climbed 1.43 per cent to 3,655.09 points the previous day. In Hong Kong, on the other hand, trading was shortened, and the Hang Seng ended 0.45 per cent higher at 30,182.44 points.
European Markets at a glance
European markets rose significantly today. The EuroSTOXX 50 opened the day with a small gain and continued to rise in the course of the day. It went into the evening 0.64 per cent firmer at 3,671.68 index units.
The DAX opened trading with a small gain and closed with a plus of 0.77 per cent at 14,040.91 points. The TecDAX was friendly at the start of the trading session and then ended 1.67 per cent higher at 3,537.37 points.
The extension of the lockdown in Germany by initially another three weeks can hardly dampen the good mood on the stock market at the moment. However, continuing strict restrictions are likely to weigh heavily on economic growth in the first quarter. It is still completely unclear whether there will not be further significant restrictions on public and economic life after the deadline.
However, with new infections falling and Fed chief Powell’s reassuring statements on the interest rate side, the sentiment continues to be more on the positive side. Meanwhile, the accounting season continued to provide momentum.
Forex, gold, oil and crypto
There was hardly any significant movement on the forex market today. The euro gained slightly against the greenback and was trading at 1.2130 US dollars late in the evening.
Oil prices eased somewhat on Thursday, moving back slightly from their highest levels in just over a year. North Sea Brent crude last cost 11 cents less than the previous day at 61.35 US dollars. WTI light oil fell 18 cents to 58.50 dollars. Oil prices recovered from even more significant losses after the stock markets gained.
After Jerome Powell brushed away economists’ inflation fears with his speech today, gold, as a traditional inflation hedge, came under heavy selling pressure, dropping to $1,825 per troy ounce by the end of the day.
Cryptocurrencies, looking at the other side of the coin, continued their rally mode with Bitcoin surching 4.8 per cent to $47,400 and many other coins and tokens following suit. Ethereum rose 2 per cent to $1,779, Cardano, being seemingly unstoppable these days, rising another 7.8 per cent to $0.94 and XRP gaining 3.8 per cent to $0.52. Aside from the overall bullish sentiment in the market, one of the many drivers for today’s price increases was the news that the New York bank and largest global custodian BNY Mellon will soon offer custodianship for digital assets.
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Corporate and world economic news
Economic data
The number of initial claims for unemployment benefits in the USA decreased in the week ending 6 February, although the previous week’s figure was revised significantly upwards. Compared to the last week, the number of claims fell by 19,000 to 793,000 on a seasonally adjusted basis, according to the US Department of Labour in Washington.
High speculation
US private investors organised on the internet have allegedly found a new object of speculation in cannabis shares. At the end of January, they had a showdown with hedge funds in the video game retailer GameStop, but recently stocks like Sundial Growers seem to have become their favourites. The previous day, they had risen almost 80 per cent on the NASDAQ. On Thursday, Sundial Growers shares temporarily rose by 3.39 per cent to 3.04 US dollars.
Alongside hydrogen and cryptocurrencies, cannabis products have recently become another important trend topic on the stock markets. The internationally discussed legalisation of marijuana has lately been a source of fantasy in the sector. According to some analysts and market observers, speculation about legalisation in the USA is currently driving this sector. At the same time, he referred to other sector stocks such as Tilray, Canopy Growth, Aurora Cannabis and Aphria, which have recently posted strong gains.
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