Markets Update Tuesday 15/12/2020 – Emergency Acceptance

Frankfurt – 15/12/2020

Emergency Acceptance

Optimism is increasingly taking hold on Wall Street after the largest vaccination campaign in US history began. Also, the chances of a further US aid package are rising again. 

Investors are also encouraged by the prospect of EU-wide approval for a first Corona vaccine before Christmas. The European Medicines Agency (EMA) has now given in to public pressure, after all, announcing its intention to complete its assessment of the marketing authorization application as early as a week from now on December 21. “The first Europeans are expected to be able to be vaccinated before the end of 2020,” EU Commission chief Ursula von der Leyen tweeted. So the EMA is also giving in and wants to approve a Corona vaccine early, despite many critical voices calling for sanity.

US Markets at a glance

The US stock markets were able to record gains on Tuesday. The Dow Jones ultimately gained 1.14 per cent to 30,200.76 points. The NASDAQ Composite also ended higher with an increase of 1.25 per cent at 12,595.06 points.

The hope of an agreement in the negotiations for a new US aid package had a supporting effect. Investors were also looking forward to the meeting of the US Federal Reserve on Wednesday. There, it is anticipated that the Fed could give an outlook on how long it will continue its current program to purchase securities.

Besides, the vote of the electors from all states of the country now confirmed the election victory of the future US President Joe Biden. Biden received 306 of the 538 votes in the Electoral College.

On the economic side, manufacturing business activity in the New York metropolitan area fell more than expected in December. Meanwhile, US import prices rose only slightly in November.

Far East Markets at a glance

The Asian markets closed lower on Tuesday. The Japanese benchmark index Nikkei closed after moderate gains the previous day with a loss of 0.17 per cent at 26,687.84 points today. On the Chinese mainland, the Shanghai Composite was ultimately down 0.06 per cent to 3,367.23 points. Losses were also reported in Hong Kong, where the Hang Seng was 0.69 per cent lower at 26,207.29 points by the close of trading.

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Investors watched with concern the further course of the corona pandemic. New restrictions to contain the virus are looming in South Korea following a local increase in the number of infections. Meanwhile, in China, key figures for industrial production were published, which rose by 7 per cent year-on-year, which was better than expected.

European Markets at a glance

European markets posted gains today. The EuroSTOXX 50 index was relatively stable at the start of trading, gaining 0.5 per cent in the day to 3,521.50 index units.

The DAX continued its positive start to the week on Tuesday, gaining around 1 per cent. At almost 13,363 points, it is now slightly above the level of early December. The TecDAX also started without significant swings and closed trading marginal 0.05 per cent higher at 3,112.54 points.

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On the European stock exchanges, too, the topic of the Corona vaccine continued to dominate. The European Medicines Agency (EMA) plans to present its opinion on the approval of the vaccine from BioNTech and Pfizer as early as December 21. Earlier, the vaccine was approved in the US by fast-track procedure over the weekend – vaccinations have already begun. 

By contrast, the hard lockdown in Germany, as part of which numerous stores and service providers will have to close from Wednesday, hardly seemed to unsettle investors.

Forex, gold, oil and crypto

In the Forex market, the euro exchange rate moved only little on Tuesday. Most recently, the common European currency cost 1.2157 US dollars. 

The recovery of the oil market will be slower than previously forecast, according to the International Energy Agency (IEA). “Demand will be lower than expected for a longer period,” the IEA announced. It reduced its crude oil demand forecast. “The market remains fragile,” the IEA wrote. Finally, many economic restrictions have again been adopted recently in Europe, dampening demand for crude oil. Nevertheless, oil prices were able to rise today. Thus, the barrel of Brent oil last cost 50.73 US dollars, 44 cents more than on Monday. The WTI barrel price even increased by 52 cents to $47.51.

The price of gold appreciated strongly today, fueled by the stimulus package hopes of investors, which would further weaken the greenback. Gold rose by $30 from $1,825 to just over $1,855.

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Cryptocurrencies were ranging again on Monday, but it seems as if Bitcoin is gearing up for its big move past $20,000. BTC currently trades at $19,410, up 1.2 per cent compared to Monday. Ethereum gained 0.3 per cent, holding its $586 level. In contrast, XRP continues its downward movement, falling 7.3 per cent on the day to now $0.4560. 

Corporate and world economic news

Economic data

In China, the economic situation and sentiment continue to brighten after the corona shock. Three critical indicators published by Beijing’s statistics bureau on Tuesday demonstrate the continuing upward trend. For example, industrial output rose 7 per cent year-on-year in November, slightly surpassing the previous month’s growth of 6.9 per cent. 

Retail sales also made another jump, rising by 5 per cent in November following a 4.3 per cent increase in October. Meanwhile, investment in property, plant and equipment rose by 2.6 per cent in the period from January to the end of November. All data were in line with analysts’ expectations.

Unemployment in the UK has continued to rise amid the corona crisis. The unemployment rate increased by 0.1 percentage points to 4.9 per cent in the three months to October, the Office for National Statistics (ONS) reported in London on Tuesday. This is the highest level since 2016, and analysts on average had expected a more significant increase to 5.1 per cent.

In the USA, Manufacturing business activity in the New York metropolitan area fell more than expected in December. The Federal Reserve Bank of New York’s index of general business activity in the District’s manufacturing sector decreased to plus 4.9. Economists surveyed by Dow Jones Newswires had forecast a decline to plus 5.4. The index had been plus 6.3 the previous month.

US import prices rose only very slightly in November. Compared to the previous month, the increase was 0.1 per cent, following a 0.1 per cent drop in October, according to the US Labor Department. Economists surveyed by Dow Jones Newswires had forecast a consensus increase of 0.3 per cent. The trend in import prices is an indication of US inflation.

Eli Lilly swallows Prevail in billion-dollar acquisition

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In the pharmaceutical industry, the second billion-dollar takeover within a few days is taking place: The US pharmaceutical group Eli Lilly wants to buy the New York biotech company Prevail, which specializes in gene therapies, for up to 1.04 billion US dollars.

Prevail’s shareholders are to receive 22.50 dollars per share – a premium of 80 per cent on Monday’s closing price.

The acquisition would strengthen Eli Lilly’s position in the lucrative business of gene therapies, which are currently among the most expensive pharmaceutical drugs in the world. Prevail, which was only founded in 2017, is researching new treatments for use in Parkinson’s disease, Gaucher’s disease and dementia – but the drugs are all still in the early stages of development. If a first product from the pipeline hits the market, another payment by Eli Lilly will be due, which would value Prevail at a total of $26.50 per share.

Just last weekend, another pharmaceutical company announced a billion-dollar purchase: AstraZeneca plans to buy US biotech Alexion, but will have to dig much deeper into its pockets to do so. At $39 billion in cash and shares, it would be by far the largest acquisition in AstraZeneca’s history.

Prevail shares rose 82.00 per cent to $22.79 in trading on the NASDAQ on Tuesday, while Eli Lilly rose 6.12 per cent to $167.33 on the NYSE.

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