Markets Update Thursday 27/02/2020 – Black swan

Frankfurt – 27/02/20

Black swan

After the possible effects of the coronavirus were underestimated on the stock markets for a long time, the opposite now seems to be the case. Markets are collapsing worldwide, and the sell button is being pressed in panic all over the globe. 

The coronavirus appears to be the Black Swan event that could trigger a recession that many critics have forecasted for a while.

The stock market is currently highly volatile. The enormous fluctuations are evidence of the extreme uncertainty of investors since nobody knows at this time whether a worldwide pandemic of the coronavirus is coming or whether it will be possible to prevent it from spreading after all. Nevertheless, serious economic effects are already becoming apparent. After Apple and Microsoft, investors now fear that many more profit warnings will hail from other companies. The scenario of an economic upswing this year thus seems to have been quietly and secretly shelved.

US Markets at a glance

Wall Street collapsed again on Thursday. The Dow Jones continued to slide after already opening deep in the red. It ended trading at 25,761.18 points, down 4.44 per cent. The NASDAQ Composite index of tech stocks also posted a significant loss at the opening of trading and continued to hold steady at this level. It closed 4.61 per cent below its level of the previous day at 8,566.48 points.

Far East Markets at a glance

Fear of the consequences of the Covid-19 spread continues to weigh on sentiment in the Japanese equity market. Japan’s leading index, the Nikkei 225, closed Thursday down 2.1% to 21,948 points. Investors around the globe fear an economic downturn because of numerous temporarily closed factories in China and partly extensive travel restrictions. The Hang Seng in Hong Kong fell by more than half a per cent. Meanwhile, mainland China’s stock exchanges are defying the virus concerns: the CSI 300 index, which comprises the 300 most important shares on the Chinese mainland stock exchanges, rose by around half a per cent against the global trend.

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European Markets at a glance

Europe’s stock markets fell sharply on Thursday. The EuroSTOXX 50 dropped noticeably in early trading and remained in the loss zone for the rest of the day. It closed the day with a discount of 3.40 per cent to 3,455.92 index units.

The German stock market also posted heavy losses on Thursday. Already starting the session deep in the red, it came under greater pressure during the day. It ended trading with a loss of 3.19 per cent at 12,367.46 points. The TecDAX also showed significant losses in early trading and remained at this level afterwards. It closed 3.33 per cent weaker at 2,942.21 points.

Forex, gold, oil and crypto

The euro fell back below the USD 1.10 mark in late US trading on Thursday. Shortly before the close of trading on New York’s Wall Street, the euro cost $1.0988. The European Central Bank had set the euro reference rate in Frankfurt in the afternoon at 1.0964 (Wednesday: 1.0875) dollars. Not only the euro but also many other currencies appreciated considerably against the dollar. This was triggered by increasing speculation that the US central bank (Fed) will cut interest rates, as the spread of the virus is expected to harm the economy.

Oil prices fell significantly on Thursday, along with share prices. At times, the losses on oil prices amounted to almost three US dollars. By late evening, the situation had calmed down again somewhat. However, the markdowns were still significant at more than one dollar. Ordinary oil cost 50.97 US dollars at the low, which was as little as at the end of 2018 for the last time. American light oil fell to its lowest level since the beginning of 2019 at 45.88. In the evening, a barrel (159 litres) of Brent North Sea oil cost 52.26 dollars. At its low, North Sea oil cost $50.97, which was as low as it had last been at the end of 2018. American light crude fell to its lowest level since the beginning of 2019 at $45.88. In the evening, a barrel of Brent North Sea oil cost $52.26. That was $1.17 less than the previous day. The price of a barrel of WTI grade US oil fell by 1.56 dollars to 47.18 dollars.

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The gold price remained exceptionally stable in the face of ongoing economic worries and was able to gain slightly again today. Currently, the troy ounce of gold costs $1,647.

Cryptocurrencies were also more stable today, Thursday. Bitcoin remained at $8,800, the same level as the previous day, while Ethereum rose by a good 1 per cent to $227. The third-largest digital asset by market capitalisation, XRP, also made up ground, rising over 3 per cent to $0.24. 

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Corporate and world news

Profit collapse at Aixtron

The global economic slowdown has caused the plant manufacturer Aixtron, which produces for the chip industry, to post a profit decline in 2019. With revenues down by three per cent to 259.6 million euros, the operating result fell by six per cent to 39.0 million euros. Net earnings collapsed by almost 30 per cent to 32.5 million euros. Based on the previous year’s incoming orders of 232 million euros (minus 23 per cent), the Management Board is aiming for sales in the range of 260 to 300 million euros by 2020. The operating return on sales (Ebit margin) is expected to be between ten and 15 (previous year: 15) per cent.

Inbev: Coronavirus spoils the beer thirst

The coronavirus is giving the world’s largest beer brewer AB Inbev a hard time. The consequences of the novel virus have weighed heavily on earnings in the first few months and will have a significant impact on first-quarter results. This comes at the worst conceivable time, as profits were already under pressure in 2019 due to high raw material costs. The figures and the outlook were poorly received on the stock market. The share of the EuroStoxx-50 heavyweight lost significant value.

In the first quarter, the earnings before interest, taxes, depreciation and amortisation (Ebitda) will decrease by about ten per cent compared to last year’s figure of about five billion dollars, the brewer of well-known global brands such as Beck’s, Budweiser, Corona and Stella Artois announced.

Paul-Hartmann share takes off

…where there are losers, there are also winners…

The share of the medical and care products manufacturer Paul Hartmann is increasing considerably. Investors have realised that the company produces, among other things, breathing masks and the disinfectant Sterillium, which is currently sold out almost everywhere.

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