Markets Update Thursday 11/11/2021 – Inflationshock Aftermath

Frankfurt – 11/11/2021

Inflationshock Aftermath

The interest rate outlook in the USA remains a topic on the market after the latest high inflation data. The accelerated rise in prices in America had weighed on investor sentiment the day before. US stock markets only partially recovered today from the previous day’s inflation shock, but tech stocks, in particular, were in demand again. 

US Markets at a glance

The US markets were looking for directional signals today and ultimately presented themselves as indecisive. The Dow Jones started the session 0.11 per cent lower at 36,038.78 points and closed slightly lower at 36,032 index units. Meanwhile, the NASDAQ Composite tech index kicked off the session up 0.83 per cent at 15,752.08 points and held this level until the Wall Street close.

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Disney and Beyond Meat, among others, presented quarterly figures. According to Dow Jones Newswires, even though the balance sheets were weaker than expected, investors do not seem to be unsettled by this. Also, the fact that bond trading is not taking place today because of the veterans’ holiday should make for less movement in the stock market.

Far East Markets at a glance

Markets in the Far East were bullish today. In Japan, the Nikkei index finished 0.59 per cent higher at 29,277.86 points, while the Shanghai Composite Index on the Shanghai Stock Exchange rose by 1.15 per cent to 3,532.79 units by the end of trading. In Hong Kong, the Hang Seng was 1.01 per cent firmer at 25,247.99 points at the closing bell.

Inflation concerns continued to be the theme in the market but did not cause much strain. After Chinese inflation surprised on the upside, stronger-than-expected consumer price inflation followed from the US on Wednesday. Inflation in the USA was above the 6 per cent mark for the first time in over 30 years.

On the other hand, positive impulses came from a rapprochement between the USA and China on climate issues.

European Markets at a glance

European markets were surprisingly robust today, with the EuroSTOXX 50 marginally lower at the start of trading and barely budging as the session progressed. In the end, it ended the session 0.21 per cent firmer at 4,358.00 units.

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The DAX opened at its previous day’s level and then fluctuated around the zero line with changing signs. Small gains in the meantime were enough to reach a new all-time high at 16,114.55 points. In the end, it was still 0.10 per cent higher at 16,083.11 points. The TecDAX started the day slightly weaker and then showed little change from the previous day. In the evening, it was still 0.24 per cent higher at 3,884.17 points.

Weak indicators came from the USA, where the stock markets did not cope as well with the US inflation data as in Europe. On Thursday, there were relatively little economic data that caused the market movement. 

In Germany, however, the main focus today was on the balance sheet season. Several DAX companies and numerous second-line stocks opened their books again today, including Delivery Hero, Merck, RWE and Siemens.

Forex, gold, oil and crypto

Meanwhile, the cheap euro turned out to be the price driver on the German stock market. The European single currency fell to 1.1454 dollars in European trading and lost further in US trading to 1.1449 US dollars. It is thus cheaper than it has been since the middle of 2020. The background to this is the rising interest rate expectations in the US, which are strengthening the greenback.

After significant losses the previous day, oil prices recovered a little on Thursday. In the evening, a barrel of North Sea Brent was traded for 82.87 US dollars, 25 cents more than the previous day. WTI oil from the USA rose by 44 cents to 81.76 dollars.

The “anti-inflation currency” gold remains in demand. In the late evening, a troy ounce of gold cost 1,862 dollars, around 0.7 per cent more than the previous day. The precious yellow metal thus remained close to its four-month high marked only yesterday.

Cryptocurrencies recovered swiftly after yesterday’s flash-crash and look extremely bullish once again. Bitcoin rose by 1 per cent to $65,100, while Ethereum added 3.7 per cent to $4,760. Other top altcoins often fared even better and posted significant gains. For example, Binance Coin (BSC) rose by 5.3 per cent to $633, Solana gained 2.7 per cent to $235, Cardano grew 1.5 per cent to $2.12, and XRP went up 2.7 per cent to $1.24. The biggest gainer amongst the top 20 crypto assets was Shiba Inu, gaining 14 per cent today. 

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Corporate and world economic news

Economic data

The British economy has continued its recovery, albeit somewhat weaker than expected. In the third quarter, gross domestic product (GDP) grew by 1.3 per cent compared to the previous quarter, the statistics office ONS announced in London on Thursday. Analysts had expected an average increase of 1.5 per cent. The growth follows a robust second quarter in which the economy grew by 5.5 per cent. In the spring, businesses had benefited strongly from the easing of numerous Corona measures. According to the ONS, growth in the summer was also largely due to these easing measures. However, economic output is still 2.1 per cent below pre-pandemic levels.

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