Markets Update Thursday 13/02/2020 – U-turn

Frankfurt – 13/02/20

U-turn

In the end, there was something of a happy ending on the stock market today, after all. 

First of all, however, things went steeply downhill, because, who would have thought it, suddenly there was sobering news about the coronavirus again.

The number of newly detected deaths caused by the coronavirus in China in the particularly severely affected province of Hubei has more than doubled compared to the previous day. The number of newly detected infections there even almost increased tenfold. According to Chinese state television on Thursday, 242 new deaths were registered in Hubei, bringing the total number of deaths in the province since the outbreak of the disease to 1,310. Worldwide the number of fatalities has risen to 1,369, with a total of more than 60,000 people infected. The number of patients cured has increased to over 6,000.

Thus, the credibility of the statistics from China is becoming more and more of a sticking point, and entering the market is currently becoming more and more of a gamble.

US Markets at a glance

The Dow Jones opened in the red today and stayed in the red all day, but was ultimately able to limit the losses. The US leading index ended the day with a loss of 0.43 per cent at 29,423.31 points, while the tech stocks index NASDAQ Composite also lost ground at the start of the day, but has since broken through the zero line. However, the increase was relinquished, so that it ultimately fell by 0.14 per cent to 9,711.97 points.

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Far East Markets at a glance

Asian equity markets suffered significantly on Wednesday from the bad news from China, after recovering considerably on Wednesday. The CSI-300 index on the Chinese mainland stock exchange recently lost 0.6 per cent. The Hang Seng in Hong Kong fell 0.3 per cent. In Tokyo, Japan’s Nikkei 225 fell by 0.1 per cent to 23,827 points at the close of trading.

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European Markets at a glance

On Thursday, profit-taking, among other things, pushed the European markets into the red. A sharp increase in the number of coronavirus infected and dead persons also caused uncertainty among investors. Besides, the balance sheet season continued to be the focus of attention.

The EuroSTOXX 50 gave way at the start and remained in the loss zone. A minus of 0.22 per cent to 3,845.90 points remained on the price board.

The Dax 30 was already lower at the beginning of Thursday trading and initially extended its losses as far as to under 13,600 points. However, by the end of trading, it had reduced its losses and closed just 0.03 per cent lower at 13,745.43 points. The TecDAX also fell, after reporting one at the opening. However, it then turned around, closing 0.31 per cent firmer at 3,280.06 units.

Forex, gold, oil and crypto

The euro remains under pressure on the financial markets. On Thursday, the common currency fell to its lowest level since April 2017 at $1.0834. A similar low from Wednesday evening was again undercut. Currently, it has recovered minimally and is currently trading at 1.0850 Dollar. The European Central Bank (ECB) set the reference rate at 1.0867 (Wednesday: 1.0914) dollars.

The British Pound is posting gains. After the surprise resignation of Chancellor of the Exchequer Sajid Javid, it initially came under pressure, but then gained. Market participants cited speculation on a more expansionary spending policy by the British government and thus stronger economic growth as the reason.

Oil prices recovered from interim discounts and have recently risen slightly. Traders attributed the move to the marginally less firm US dollar. A barrel of North Sea Brent crude last cost 56.14 US dollars. That was 35 cents more than the previous day. The price of American WTI crude oil rose by 18 cents to 51.35 dollars.

The price of gold went up significantly today. The precious yellow metal was again sought out as a safe haven and posted a gain of 0.65 per cent to around $1,576.

The cryptocurrency market took a short breather today after prices rose sharply in the past few days. Nevertheless, there were again winners among the top 10 cryptos. 

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XRP, for example, took another scoop and won another 7 per cent to $0.3250. This means that the price of what is currently the third-largest digital asset in terms of market capitalization has risen about 16 per cent in the last seven days. 

Bitcoin and Ethereum, number 1 and 2 in the crypto universe, however, lost slightly. A Bitcoin currently costs $10,200 and Ethereum $267. 

Corporate and world news

Alibaba continues to grow strongly

The Chinese Internet giant Alibaba was able to increase its sales and profits significantly in the past quarter.

In the third quarter (end of December) the group increased sales by 38 per cent to 161.5 billion Chinese Yuan (21.3 billion Euro), the company announced in Huangzhou. The growth in the number of users continued to drive trade via Internet portals. However, growth in the core business in China slowed down somewhat, but this was offset by strong increases in shopping and payment volumes on the heavily advertised Chinese “Singles’ Day” for single people in November.

The Cainiao logistics network and the cloud computing division, with which Alibaba is competing against Amazon, Alphabet and Microsoft, posted particularly strong gains. The bottom line is that the profit attributable to shareholders rose by 58 per cent to 33 billion yuan. Alibaba slightly beat expectations in terms of sales and adjusted earnings per share. With sales and adjusted earnings per share, Alibaba slightly beat expectations, but the share was still down in New York trading. The stock was 1.76 per cent weaker at USD 220.36.

Chinese car demand collapses

The Chinese car market has accelerated its decline following the outbreak of the coronavirus. In January, almost a fifth fewer vehicles were probably sold, the Chinese manufacturers’ association CAAM announced. Sales of climate-friendly cars, which in China include hybrid and electric cars, even shrank by half. Vehicle sales have almost come to a standstill in some regions of the People’s Republic since the outbreak of the virus. In Hubei province, where the novel pathogen first appeared in late January, drastic restrictions are in place to slow the spread of the disease.

Economic data

In Germany, the consumer prices for January were announced today. As expected, inflation has thus increased at the beginning of the year. Consumer prices climbed by 1.7 per cent year-on-year in January, according to the Federal Office of Statistics. This confirmed a first survey as expected. In December, the rate had still been 1.5 per cent. Compared to January 2020, consumer prices fell by 0.6 per cent in January. 

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