Markets Update Thursday 14/10/2021 – Thanks, Banks.

Frankfurt – 14/10/2021

Thanks, Banks.

Convincing quarterly reports and progress on the labour market have attracted US investors back to the stock market. Above all, the convincing start to the corporate reporting season pushed inflation fears into the background today. In addition, there was surprisingly robust weekly data from the labour market. The number of initial jobless claims fell below 300,000 for the first time in the corona crisis.

Bank balance sheets, usually a reliable indicator of the economic climate, showed that the US economy is picking up speed again. Before the US stock market opened, four heavyweights from the sector – Citigroup, Bank of America, Wells Fargo and the investment bank Morgan Stanley – opened their books. The results are impressive, driven above all by brisk business with mergers and acquisitions and the release of provisions. In addition, America’s consumers are consuming more again. All banks earned significantly more in the summer quarter, which is not usual for the season, at least not for investment banks. The previous day, top dog JPMorgan Chase was already impressed with its figures.

US Markets at a glance

Wall Street celebrated the solid start for the reporting season by the big banks. The US leading index Dow Jones opened the session somewhat firmer and was then able to extend its gains further, closing 1.56 per cent higher at 34,912.56 points. The NASDAQ Composite tech index started the session significantly already higher and ended the session with an increase of 1.73 per cent to 14,823.43 points.

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The large US banks dominated the trading day: After the major bank JPMorgan presented its figures for the past quarter yesterday, its competitors Bank of America, Morgan Stanley, Wells Fargo and Citigroup followed suit today. All of the institutions were able to shine with impressive profits.

However, investors should continue to pay particular attention to the consequences of inflation in the reporting season that has now begun.

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Far East Markets at a glance

Investors on the Asian stock exchanges only ventured slightly out of hiding on Thursday.

In Japan, the Nikkei benchmark index ultimately gained 1.46 per cent to 28,550.93 points. On the Shanghai stock exchange, the Shanghai Composite lost 0.10 per cent to 3,558.35 points. There was no trading in Hong Kong due to a public holiday after there had already been no trading there the previous day due to a typhoon warning. On Tuesday, the Hang Seng closed 1.43 per cent lower at 24,962.59 units.

European Markets at a glance

The European stock markets benefited above all from the friendly Wall Street and the big American banks. The EuroSTOXX 50 ended up gaining 1.61 per cent to 4,149.06 points, having already started on a friendly note.

Frankfurt’s markets also showed a friendly trend. The DAX had already risen significantly by the time the starting bell sounded and left the session 1.40 per cent firmer at 15,462.72 points. Meanwhile, the TecDAX was also clearly on a green ground, gaining 1.7 per cent to 3,711.42 units. 

Positive impulses from the US stock markets also supported the European markets on Thursday. The market was pleased that the minutes of the latest Fed meeting published the previous evening indicated a slow pace for the expected reduction in bond purchases, Credit Suisse said. Currently, the Fed is buying $120 billion of government and mortgage bonds a month to prop up the economy amid the pandemic. The volume could be scaled back from mid-November.

Forex, gold, oil and crypto

On Thursday, the euro exchange rate benefited significantly from a weakening US dollar and rose above the 1.16 dollar mark. During the day, the common currency euro climbed to a daily high of 1.1624 dollars. In US trading, the euro was slightly lower again at 1.1598 dollars on the foreign exchange market.

Oil prices rose again on Thursday. In the evening, however, prices gave back some of the early gains after it was announced that oil reserves in the USA had risen unexpectedly sharply. Thus, a barrel of North Sea Brent cost 30 cents more at 83.48 US dollars. US light oil WTI increased by 18 cents to 80.63 dollars.

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Gold appreciated slightly further and was traded for $1,796 per troy ounce. Intraday, the safe harbour rose as high as $1,800. 

Most major cryptocurrencies consolidated their previous days’ gains, but Ethereum posted more gains. Bitcoin ultimately lost 2.1 per cent to $56,800, Cardano declined by 1.9 per cent to $2.14, and XRP fell 2.2 per cent to $1.11. Ethereum was the only daily gainer under the top 10 digital assets by market capitalization and rose 3.3 per cent to $3,750. Other winners were DeFi heavyweights Uniswap and ChainLink, rising 4.3 and 2.4 per cent to $25.80 and $26.14, respectively.

Corporate and world economic news

Economic data

In China, producer prices rose in September as strongly as they have not in almost 26 years. The background to this is the very sharp rise in the cost of energy such as coal. Prices at the producer level rose by 10.7 per cent compared to the same month last year, as the statistics office announced in Beijing on Thursday. This is the largest increase since November 1995. Analysts had expected an increase of 10.5 per cent. Compared to August, the growth accelerated again, where the figure was 9.5 per cent.

Although prices for producers continue to rise strongly in China, this development has hardly reached consumers so far. The increase in consumer prices in September was 0.7 per cent compared to the same month last year and thus below the level of August with 0.8 per cent.

The price pressure at the producer level in the USA was somewhat lower than expected in September. According to the Department of Labour, producer prices rose 0.5 per cent from the previous month and were 8.6 per cent above the level of the same month last year versus 0.6 per cent forecast.

The number of new applications for unemployment benefits in the USA has decreased more than expected as of 9 October 2021.

Compared to the previous week, it fell by 36,000 to 293,000 on a seasonally adjusted basis, according to the US Department of Labour in Washington. Economists had forecast a decline to 318,000. The four-week moving average fell by 10,500 from the previous week to 334,250.

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