Markets Update Thursday 24/09/2020 – Stimulate us!

Frankfurt – 24/09/2020

Stimulate us!

The financial markets returned to a cheering mood today due to the political developments in the American capital. Supportive for a renewed risk reset back to risk-on was that governments would respond to the economic slump resulting from the current crisis with new economic stimulus packages. In particular, the government in Washington is under pressure shortly before the presidential elections in November.

The Democrats in the House of Representatives have now announced that they will trim their proposal for a new stimulus package. It is a concession to restart negotiations with the Trump administration.

This is fueling new, gentle hopes on the markets that the economic stimuli and follow-up financing of unemployment benefits could come sooner after all. The US Federal Reserve had already made it clear that it does not want to act before the stimulus package is in place; therefore, it is the politicians that need to act.

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US Markets at a glance

Encouraged by hopes for a new aid program, the US Wall Street stock markets rallied during the day.

The Dow Jones finally managed a plus of 0.20 per cent to 26,815.44 points. The NASDAQ Composite also leapt into positive territory, with a 0.37 per cent increase to 10,672.27 index units at the end of the day.

Despite rising infection figures and the US presidential election campaign, in the course of which market participants also fear a worsening of the US-Chinese conflict, the US stock markets have started an attempt to recover on Thursday. Technology stocks, in particular, which were still under pressure in the middle of the week, have rallied. Meanwhile, the US initial applications for unemployment benefits rose surprisingly.

Far East Markets at a glance

Asia’s stock markets were in negative territory after the first signals from the USA and Europe were equally weak.

In Tokyo, Japan, the Nikkei dropped by 1.11 per cent to 23,087.82 points.

On the Chinese mainland, the Shanghai Composite fell 1.72 per cent to 3,223.18 points while the Hang Seng 50 in Hong Kong was 1.82 per cent weaker at the close of trading at 23,311.07 index points.

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On Thursday, investors in Asia did the same as they did on Wall Street the previous day, going into risk-off. The increasing number of corona cases and the dwindling hopes for a stimulus package in the USA had a negative impact. 

European Markets at a glance

The European markets were also weak today, and prices continued to fall.

The EuroSTOXX 50 was 0.64 per cent weaker at 3,159.64 index units.

The Dax 30 lost 0.29 percent to 12,606.57 points. The TecDAX also went into the red right at the start. As the year progressed, it fell deeper into the red and ended trading at minus 0.98 per cent at 3,011.20 points.

Negotiations on an economic stimulus package in the US, concerns about a chaotic election in the US and the situation regarding the corona pandemic were all negative factors weighing on the sentiment.

Meanwhile, the ifo business climate indicated that the mood in German companies has brightened for the fifth consecutive month.

Forex, gold, oil and crypto

On the Forex market, the euro recovered somewhat against the greenback. First, the exchange rate of the common currency fell to 1.1633 US dollars, its lowest level in about two months. In the US trade, however, things went up, and the euro rose to 1.1674 US dollars. The Turkish lira made significant gains against the euro and the dollar. The interest rate decision of the Turkish central bank was decisive. Contrary to expectations, the central bank raised its key interest rates significantly by two percentage points.

Oil prices fell slightly on Thursday. In the afternoon, a barrel of North Sea Brent cost 41.56 US dollars, 22 cents less than on Wednesday. The barrel price of US West Texas Intermediate (WTI) also lost some ground, falling 10 cents to $39.83.

On the other side of the coin, the precious metal gold was able to stage a solid recovery, initially falling as low as $1,848 and closing at $1,868.

Similarly, cryptocurrencies moved higher, pushing the overall market capitalization to $335 billion. Bitcoin increased by 3.6 per cent to $10,700, Ethereum rising 5.6 per cent to $344 and XRP climbing higher by 4.1 per cent to $0.2330. ChainLink was able to shoot up 18.5 per cent after it was on a sharp decline for days.

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Corporate and world news

Economic data

Contrary to expectations, the number of initial applications for benefits from the US unemployment insurance scheme increased in the week ending September 19. Compared to the last week, the number of applications on a seasonally adjusted basis climbed by 4,000 to 870,000, according to the US Department of Labor in Washington. Continuing jobless claims declined to 12,58 million compared to 12,747 million. However, experts expected a decline to 12,3 million claims.

The mood among companies in Germany continues to brighten. The ifo Business Climate Index increased to 93.4 points in September from 92.5 points in the previous month, the fifth consecutive rise. Economists had reckoned with 93.8 points. “The German economy is stabilizing despite rising infection figures,” said ifo President Clemens Fuest. The managers assessed the outlook for their businesses and their situation more favourably than recently. 

Adyen change

The Chief Technology Officer and co-founder of the Dutch payment processor Adyen Arnout Schuijff intends to leave the company at the turn of the year.

“After 14 years of building up Adyen, it is time to leave the next stage of development to a new generation of engineers,” Schuijff said in Amsterdam on Thursday. Company CEO Pieter van der Does remain optimistic about the future of the payment processor, which has gained in attention following the Wirecard bankruptcy. As of this Monday, Adyen is a member of EuroStoxx 50.

On EURONEXT exchange, the Adyen shares temporarily lost 2.35 per cent to EUR 1,539 in Thursday trading, but turned the corner in the day and ultimately closed 0.44 per cent up at EUR 1,583.

Tesla sues

The electric car manufacturer Tesla wants to enforce an exemption from US punitive duties on imports from China through legal action. The Elon Musk group is defending itself at the US Court of International Trade in New York against the “illegal imposition” of duties on goods imported from China.

The suit was filed on Monday. The defendants in the case, in addition to the US government, are its trade representative Robert Lighthizer and the head of the customs and border authority Mark Morgan, as is evident from the statement of claim. Tesla not only wants to use the proceedings to avert existing import duties but also to obtain compensation for duties already paid.

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