Markets Update Thursday 14/11/2019 – What now?

What now?

The lack of progress in the trade talks between China and the USA, as well as new threats by Donald Trump to raise the punitive tariffs against China possibly further, have unsettled many investors. At the same time, economic concerns from China and Japan also received new food for thought. “Disappointing retail sales and worse than expected industrial production figures from China remind us that the global economy is still suffering from the trade conflict,” said market analyst Milan Cutkovic of brokerage firm AxiTrader.

Besides, the market lacked new impetus. The fact that the German economy slipped by a hair’s breadth past a recession in the summer quarter left investors cold. “Today’s figures are no reason for complacency,” warned ZEW economist Friedrich Heinemann. “For Germany’s well-being, it is irrelevant whether the quarterly growth is a touch below or above the zero line. Rather, the fact that Germany’s longer-term growth prospects are declining must cause concern.”

The eurozone as a whole grew by 0.2 per cent in the summer quarter. The growth rate of the spring was thus maintained. With Italy, Lithuania and Austria, Germany is at the bottom of the growth league in the currency area.

US Markets at a glance

Thursday trading on Wall Street was restrained.

The Dow Jones oscillated around the zero line in the course of trading and finally went into the evening with hardly any change at 27,783.26 points. The tech stocks also failed to gain momentum on Thursday: the NASDAQ composite dropped slightly by 0.04 per cent to 8,479.02 points.

Far East Markets at a glance

The Asian stock markets also showed a weaker trend on Thursday. Hong Kong, which was hit by protests, again recorded significant price losses. The Hang Seng index recently lost about 0.70 per cent. The CSI 300 index with the 300 most important stocks on the Chinese mainland stock exchanges, on the other hand, rose slightly to 0.32 per cent. In Tokyo, the Nikkei 225 benchmark index closed 0.8 per cent lower.

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Investors continued to focus on the US-Chinese trade dispute. Most recently, doubts about an early agreement between the two parties weighed on the markets. Weaker than expected economic data also dampened sentiment in many places on Thursday. In addition, Hong Kong was the focus of attention as the unrest continued.

European Markets at a glance

Europe’s most important stock markets presented little movement on Thursday.

The EuroSTOXX 50 started almost unmoved and continued to trend in a narrow range around the zero line in the morning. In the further course of the day, however, the terrain was red: to the sound of the closing bell, a loss of 0.28 per cent stood at 3,689.20 units on the price board.

The Dax fluctuated in a narrow range between 13,159 and 13,219 points on Thursday. The leading index dropped out of trading at 13,180 points, 0.38 per cent or just under 50 points less than the day before.

Forex, gold, oil and crypto

The euro climbed back above the 1.10 dollar mark in the evening, after falling to 1.0989 dollars at noon – its lowest level since mid-October. The European Central Bank (ECB) set the reference price at 1.0997 (Wednesday: 1.1006) dollars.

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In the meantime, the Australian dollar is one of the worst performers in Forex this week as the market realises the big miss in Aussie employment figures alongside weak economic data from China. The Aussie thus dropped to under 0.68 US dollars.

Due to renewed doubts about the current markets, the demand for gold has increased significantly today. The precious metal temporarily rose to over $ 1,473 an ounce during the day. Oil prices, on the other hand, slipt lower again with Brent crude oil being traded for $62.21 and WTI for $56.65 a barrel. 

Cryptocurrencies depreciated again on Thursday, bringing the overall market cap to just $236 billion. Bitcoin is currently traded at $8,600, Ethereum at $183 and XRP at just $0.2670. 

Corporate and world news

Chile’s Peso trending towards record-low 

On Thursday, the peso slipped to a new record low in trading with the US dollar. At times, one dollar paid more than 808 pesos, more than ever before. Even a multiple billion injections of money from the central bank for the country’s financial system could not stop the currency from falling for the time being.

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As the Chilean central bank announced late on Wednesday evening, the country’s financial system will be provided with new liquidity in a volume of four billion dollars in the national currency and US dollars. The measures will take effect today, Thursday, and run until January 9.

Since the beginning of the month, Chile’s currency has lost about eight per cent in value. The country has been shaken for weeks by a wave of violent protests. Among other things, the demonstrators demanded a new constitution. All opposition parties issued a joint statement on Tuesday calling on the government to convene a constitutional assembly.

Canopy Growth share plummets by double digits

On Thursday before the US stock market launch, Canadian cannabis producer Canopy Growth gave investors an insight into its books. The company’s loss increased to 374.6 million Canadian dollars in the second quarter of 2020, up from 330.6 million CAD a year earlier. This represents a loss per share of 1.08 Canadian dollars. Canopy Growth CEO Mark Zekulin said: “The last two quarters have been challenging for the Canadian cannabis sector as provinces have made fewer purchases to reduce their inventories, retail openings have fallen short of expectations, and cannabis 2.0 products have yet to hit the market,” the company’s press release said.

On the sales side, Canopy Growth grew from a net 23.3 million CAD to 76.6 million Canadian dollars, an increase of 228.76 per cent. However, FactSet analysts did not meet their 90.6 million CAD revenue expectations.

Despite the mixed balance sheet, Zekulin is optimistic: “We believe that our underlying data is strong and we are confident that we are moving in the right direction. After five years of investment in market research, product development, product marketing and the design, construction and qualification of a production facility, we are now advised to bring our Cannabis 2.0 product offerings to market,” said Zekulin. These are edible products, beverages and vape offers. Due to this development, the company expects “significant growth” next year.

Investors are ripping for Qiagen

The Qiagen share, which is listed on the MDax and TecDax, can increase at a double-digit rate. The genetic diagnostics and biotech group could soon fall into US hands. The technology group Thermo Fisher Scientific approached the company about a possible takeover, the news agency Bloomberg reported, citing people familiar with the matter. Qiagen is currently worth more than seven billion dollars on the stock exchange.

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Both companies could not be reached for a statement at first. There is no certainty that there will be a transaction, the circles continued. Other bidders for Qiagen could also enter the plan.

Cisco warns and disappoints

The American network equipment provider Cisco expects a decline in revenues of three to five per cent to 11.82 to 12.07 billion dollars in the current year. Analysts, on the other hand, have so far estimated revenues at 12.77 billion dollars. According to Cisco, the adjusted result is expected to be between 75 and 77 cents per share, with experts predicting 79 cents so far. The Cisco share lost 6.4 per cent at the start of trading in New York. In the first quarter, Cisco increased its turnover by one per cent to 13.16 billion dollars. The company calculated earnings per share at 84 cents. Both figures exceeded analysts’ expectations. Cisco wants to concentrate more on software and cybersecurity to absorb the decline in the traditional hardware business. The Cisco share fell by around five per cent in post-market trading.

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