Markets Update Tuesday 22/12/2020 – Years of Brexit

Frankfurt – 22/12/2020

Years of Brexit

The approaching start of vaccinations in Europe displaces the fear of the mutated virus amongst stock market investors. Thus, BioNTech’s vaccine approval in Europe on Monday evening seems to be gradually having a positive effect on the markets. 

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While there was a relief on Europe’s stock exchange, the mood on Wall Street clouded over. Due to weak economic data, the Dow Jones fell back, but the NASDAQ once again posted gains.

The American aid package also supported the greenback, which gained 0.1 per cent against a basket of currencies. The British pound was also under renewed pressure since there is still no agreement in the negotiations between the European Union and the UK on a trade deal. There is a risk that Britain will leave the EU single market at the end of the year without an agreement. According to insiders, the EU is ready to continue Brexit talks even after the year-end deadline. 

So, it seems that we can look forward to the continuation and another season of the Brexit telenovela in the new year…

US Markets at a glance

Investors in the US stock markets were indecisive on Tuesday. The Dow Jones closed down 0.67 per cent at 30,015.51 points while the NASDAQ Composite hit a new record high of 12,840.57 points in early trade and ending 0.51 per cent firmer at 12,807.92 points.

Far East Markets at a glance

The Asian stock exchanges fell sharply on Tuesday. The Japanese benchmark index Nikkei closed with a loss of 1.04 per cent at 26,436.39 points. On the Chinese mainland, the Shanghai Composite fell by 1.86 per cent to 3,356.78 points by the close of trading. In Hong Kong, the leading index Hang Seng lost 0.71 per cent to 26,119.25 index points.

This meant that Asia’s stock markets were no longer able to buck the weaker global trend. Concerns about the new corona variant also gripped Asian investors after a day’s delay. It is now feared that the tightened measures in Europe on travel and goods transport could also have negative economic consequences globally.

European Markets at a glance

The European stock exchanges rose on Tuesday. The EuroSTOXX 50 started the session slightly higher and significantly increased its gains in the further course of trading. In the end, it posted a plus of 1.50 per cent to 3,500.43 points.

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In Frankfurt, the Dax was also able to close with a plus, increasing 1.3 per cent to 13,418.11 points and thus again rose above the psychologically important mark of 13,300 points. The TecDAX also rose significantly and closed 1.41 per cent stronger at 3,180.52 points after starting with a moderate gain.

Although the number of newly infected people with Covid-19 remained high, EU countries were gearing up to start the vaccination campaign. Experts also expressed confidence that the vaccine would also be effective against the virus’s newly emerged variant. There was also relief that the US Congress finally passed the 900 billion US dollar stimulus package.

Forex, gold, oil and crypto

The euro weakened significantly on the Forex market on Tuesday. In US trading, the last price paid for the common currency was 1.2159 

US dollars. 

Oil prices remained under pressure on the commodities market. North Sea Brent fell 53 cents to 50.36 US dollars while the price of a barrel of US WTI decreased by 62 cents to 47.35 US dollars. Oil prices thus moved further away from the highs they had reached on Friday since March.

Surprisingly, the precious metals market also remained under pressure. Despite the announcement of another stimulus package worth almost $1 billion, gold lost almost $20 per troy ounce and was trading at $1.862 in the evening.

It came to a big, somewhat incomprehensible, bang on the cryptocurrency market today. On the one hand, Bitcoin and Ethereum were able to gain, but on the other hand, a huge sell-off of XRP was triggered. Ripple, the fintech company that wants to make XRP big, is now reportedly being sued by the SEC. The story and allegations are neither new, nor do they make any sense, but many retail investors got nervous nonetheless and sold their XRP positions. As a result, XRP lost more than 24 per cent to $0.35. On the other hand, Bitcoin gained 4.2 per cent to $23.600, while Ethereum rose 1.4 per cent to $614.

Corporate and world economic news

Economic data

The US economy grew somewhat more strongly in the third quarter than previously reported. According to the data of the third release reported by the Department of Commerce, the performance of the US economy increased by 33.4 per cent on an annualised basis compared to the previous quarter. The second release had only indicated a plus of 33.1 per cent. 

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Sentiment among consumers in the USA unexpectedly weakened significantly in December. As reported by the Conference Board research institute, the consumer confidence index fell to 88.6. Economists surveyed by Dow Jones Newswires had expected a reading of 97.5. The previous month’s result was revised down to 92.9 from an initial 96.1. The index for assessing the current situation decreased to 90.3 (last month: 105.9), while that for expectations increased to 87.5 (84.3).

The new restrictions in response to the coronavirus pandemic continue to depress consumer sentiment in Germany at the turn of the year. The GfK consumer researchers recorded a decline in their consumer climate indicator for January 2020 to minus 7.3 from a revised minus 6.8 points in the previous month. They had initially reported a value of minus 6.7 points for December. However, the weakening was far less pronounced than expected, as economists surveyed by Dow Jones Newswires had assumed a decline to minus 9.5 points based on the original data for January.

Peloton takes over competitor

The shares of home trainer manufacturer Peloton rose by about 12 per cent. The company wants to buy its competitor Precor for 420 million US dollars. Peloton shares have already increased more than fivefold this year, mostly due to the adjusted lifestyle of users during the pandemic.

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