Markets Update Thursday 19/11/2020 – Wait and See

Frankfurt – 19/11/2020

Wait and See

There is not much news to report that concerns the financial markets today. Investors and traders are still caught in the field of tension between the current corona situation and the existing restrictions and, on the other hand, the vaccine hopes of several enterprises.

The simple conclusion of this situation, at least on today’s trading day: the crisis is not over yet. As a result, investors widely held back and didn’t place any aggressive bets.

US Markets at a glance

On Thursday, Wall Street showed a slightly positive trend.

The Dow Jones traded in negative territory but ultimately closed the session with a 0.15 per cent increase to 29,482.24 points. The NASDAQ Composite also gained more ground after falling in the loss-zone for most of the trading day, closing the day 0.87 per cent higher at 11,904.71 points.

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The rising corona infection figures temporarily depressed investor sentiment. The number of corona-related deaths in the USA also reached its highest level since the beginning of May. The city of New York announced on Wednesday that it would close all public schools. 

Far East Markets at a glance

Asian stock markets trended mostly weaker on Thursday. The high number of new corona infections, particularly in the USA and Europe, continues to urge caution. In addition, the weak US specifications from the previous day put pressure on sales. 

The Japanese leading index Nikkei ultimately fell by 0.36 per cent to 25,634.34 points. On the Chinese mainland, the Shanghai Composite rose by 0.47 per cent to 3,363.09 points. The Hang Seng index finally posted a minus of 0.71 per cent to 26,356.97 units in Hong Kong.

European Markets at a glance

Europe’s stock exchanges recorded losses today. The EuroSTOXX 50 was already weaker at the start of trading and closed 0.87 per cent at 3,451.97 index units.

Germany’s leading index was also down on Thursday. It ended the day 0.88 per cent down at 13,086.16 points. The TecDAX also started trading in negative territory but managed to leap into the profit zone in the day, ultimately ending 0.54 per cent stronger at 3,033.31 units.

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Concerns about rising corona infection figures continued to weigh on the market – despite encouraging news about several vaccines. Investors were worried about further lockdown measures in the USA, which could have a significant impact on the economy.

Forex, gold, oil and crypto

The currency exchange rate of the euro has risen on the foreign exchange market in US trade. Shortly before the end of trading on Wall Street, the common currency is sold for 1.1876 US dollars, thus reaching its highest level for the day. 

Meanwhile, the Turkish central bank has raised the key interest rate sharply – from 10.25 per cent to 15 per cent. As a result, the Forex exchange rate of the Turkish lira jumped up by almost two per cent, to 7.56 lira against the US dollar.

Oil prices fell also slightly on Thursday. With 44.06 per barrel North Sea Brent cost 31 cents less than the day before. Also, WTI oil gave way slightly and became cheaper by 30 cents to 41.50 US dollar per barrel.

Gold prices on the commodities market fell again. At $1,863 per troy ounce (31 grams), the precious metal cost 0.4 per cent less than the previous day. 

The cryptocurrency market was again holding strong and even managed to grow once again after a short intraday pullback. Bitcoin rose again to over $18,000 while Ethereum shot up to $495 and XRP recapturing the $0.30 round-mark. Litecoin and the defi-token ChainLink also saw strong demand, rising sharply in price to $80 and $13.90 respectively. 

Corporate and world economic news

Economic data

The weekly figures from the US labour market didn’t help with today’s overall market mood. The number of new applications for unemployment benefits rose by 31,000 to 742,000 and thus remains at a high level. Only 700,000 applications were expected by market analysts. This is a severe setback, which shows that the recovery of the US labour market is sluggish at best.

The situation of US industry in the Philadelphia region deteriorated in November. The Federal Reserve Bank of Philadelphia’s economic index Philly Index) fell to plus 26.3 points from plus 32.3 in October. Economists surveyed by Dow Jones Newswires had expected a decline to plus 22.0.

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ECB President Lagarde on monetary policies

ECB President Christine Lagarde commented positively on the monetary policy effectiveness of the negative deposit interest rate of the European Central Bank. Lagarde said in her hearing as Chair of the Systemic Risk Council (ESRB) in the European Parliament’s Economic and Monetary Affairs Committee: “From the ECB’s point of view, we have generally positive experience with negative interest rates. I believe that the way in which we have fulfilled our mandate using these negative interest rates has shown their effectiveness”. The staggered deposit interest rate introduced in September last year has also proved effective.

Most analysts expect that the Governing Council of the ECB will not decide on a further reduction of the deposit rate (currently minus 0.50 per cent) on December 10. However, this is not ruled out. ECB President Lagarde had said in her EP hearing this morning: “All options are on the table”.

Bank representatives have repeatedly called for an abolition of the negative deposit rate. They hope that in the event of a further reduction, a larger proportion of surplus deposits will be exempted from this interest rate.

Nvidia with jump in sales

The business with data centres and new graphics cards gave the computer group Nvidia a strong jump in sales in the past quarter. Revenues rose by 57 per cent year-on-year to 4.73 billion dollars, Nvidia announced after the close of the US stock market on Wednesday. Profits in the third quarter, which ended at the end of October, increased by almost 49 per cent to 1.34 billion dollars.

Nvidia has become known primarily as a specialist for graphics cards

– until it turned out that with the technology of the company applications based on artificial intelligence and machine learning can run very well too. This brought Nvidia technology increasingly into data centres. In the past quarter, revenue in this business grew by 162 per cent year-on-year to $1.9 billion.

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