Markets Update Thursday 30/01/2020 – How bad is it really?

Frankfurt – 30/01/20

How bad is it really?

Fearing a damper on the global economy from the coronavirus outbreak, investors withdrew from the equity markets again on Thursday.

The number of total infections and deaths caused by the lung disease from China rose again. The total number of deaths increased by 38 to 170, according to the Chinese health authorities on Thursday, and the number of confirmed cases rose to 7,711 in China. After Tibet also reported the first case of the new coronavirus, infections have now been confirmed in all regions and provinces of China. Outside China, there are currently around 50 infections. Given the spread of the coronavirus, the Emergency Committee of the World Health Organization (WHO) is meeting today to discuss whether to declare a “health emergency of international concern”.

It is, therefore, no big surprise that investors worldwide are pulling the ripcord.

US Markets at a glance

In the USA, after initial losses, things are looking up on Thursday. The Dow Jones showed a 0.33 per cent discount to 28,640.16 units at the opening, remained largely in the red, but is currently able to make some gains.

The balance sheet season is causing some movement in individual stocks: on the eve of the financial year, stock market giants such as Microsoft, Tesla and many more presented their key figures. And on Thursday, too, balance sheets, in particular, were on the agenda before the stock exchange opened. After the close of the trading session, the focus was on Amazon: Jeff Bezos’ company also invites you to its annual press conference.

Far East Markets at a glance

The rapid spread of the new coronavirus is making investors on the Asian stock markets increasingly cautious. This was compounded by sluggish specifications from the US stock markets, which came under pressure in late trading in the wake of monetary policy statements by the US Federal Reserve. Federal Reserve Chairman Jerome Powell, for example, expressed his dissatisfaction with the inflation trend and emphasised that the coronavirus would probably harm the economies of China and Japan and possibly also on a global level.

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In Tokyo, the Nikkei 225 benchmark index fell by 1.7 per cent to 22,977 points by the end of trading. The Hang Seng in Hong Kong continued its slide of the previous day with a minus of 2.9 per cent. On the Chinese mainland, trading remained suspended due to the New Year celebrations.

European Markets at a glance

Europe’s stock markets also recorded strong losses. The EuroSTOXX 50 started the trading day in the red and maintained this trend. It went into the evening with a discount of 1.22 per cent at 3,690.78 units.

The German stock market also fell sharply again on Thursday. The Dax 30 began the session already deep in the red and remained in the red throughout the day. In the end, it posted a discount of 1.41 per cent to 13,157.12 points. Also, the TecDAX in Thursday trading showed substantial losses. It closed 1.65 per cent down at 3,105.56 points. 

Forex, gold, oil and crypto

The euro exchange rate rose slightly on Thursday. Most recently, the common currency of the 19 euro countries costs 1.1036 US dollars. The European Central Bank (ECB) had set the reference rate at 1.1029 (Wednesday: 1.1001) dollars. The dollar had thus cost 0.9067 (0.9090) euros.

The economic data from the euro-zone was solid but failed to provide any significant direction for forex trading. The same is true for American growth figures: The world’s largest economy maintained its robust growth rate in the fourth quarter. However, the USA grew noticeably more slowly over the whole of last year than in the previous year.

Oil prices continued their downward trend. This is hardly surprising given the expected decline in demand from China. A barrel of North Sea Brent crude last cost USD 58.74. That was USD 1.07 less than the previous day. The price of American WTI crude oil fell by 1.09 to 52.22 dollars.

Gold is rising slightly because of the uncertain situation. At the close of trading, a troy ounce cost $1,582. That was a good five dollars more than the day before.

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The cryptocurrency market is also continuing its upward trend. The overall market capitalisation rose to $262 billion – another 7 billion more than the previous day. The Bitcoin price increased by a further 1.8 per cent to $9,520 while Ethereum rose by over 4 per cent to $183 and XRP by 3.2 per cent to $0.2440. 

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Corporate and world news

Coca-Cola: sugar-free booming

Coca-Cola continues to benefit from its sugar-free sherbet, which has become a bestseller. With this product, the Group once again achieved a double-digit growth rate in 2019. In pre-market trading, the share rose by 1.8 per cent.

Overall, the beverage group’s sales last year rose by nine per cent to 37.3 billion euros. Earnings climbed by ten per cent. Earnings per share in 2019 even jumped by 38 per cent to 2.07 dollars. That Coca-Cola is picking up again is also shown by the development in the fourth quarter. During this period, revenues even rose by 16 per cent. This was due on the one hand to strong organic growth, but also price increases. Business in Latin America and Asia was particularly strong last year. In Europe, however, sales declined slightly. 

Facebook disappoints

Facebook reached the mark of 2.5 billion active users. This represents an increase of 50 million within three months. The company figures also look good. In the final quarter of 2019, revenue rose by a quarter year-on-year to a good $21 billion – more than analysts had expected. At the same time, however, profits rose by a comparatively moderate seven per cent to 7.35 billion dollars. Profit growth was slower than investors are used to from Facebook. In the off-exchange market, the share price slumped by around seven per cent at times.

PayPal balance sheet for the fourth quarter of 2019

In the US after-market, the payment service provider PayPal presented its figures for the past quarter of the year on Wednesday. In the fourth quarter of 2019, earnings per share were $0.86, while analysts’ estimates were $0.825. In the same quarter of 2018, PayPal reported earnings per share of $0.69.

The online payment service suffered a profit slump at the end of the year despite high consumer spending during the Christmas business. Due to high expenditures, the fourth quarter’s surplus fell by 13 per cent to 507 million dollars (461 million euros) compared to the previous year’s figure, the company announced on Wednesday after the US stock market closed.

Although revenues rose by 17 per cent to $5.0 billion, a stronger increase than analysts had expected, the share price fell sharply in the post-trading period. On Thursday, stocks in trading on the Nasdaq fell to a low of $112.42 but ultimately rose 0.39 per cent to $117.12. Concerning the outlook for the current quarter, PayPal remained below the Wall Street forecasts with a turnover of a maximum of 4.84 billion dollars.

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