Markets Update Wednesday 02/09/2020 – One Direction

Frankfurt – 02/09/20

One Direction

The scenario of the stock exchange bulls is still unchanged, and hope and faith are all the stronger. They continue to rely on a rapid recovery of the economy after the Corona crisis, with the many trillions in liquidity provided by governments and central banks.

US Markets at a glance

Investors on the US stock markets took up their positions again on Wednesday. The Dow Jones gained 1.58 per cent to 29,099.05 points. The tech stocks index NASDAQ Composite climbed another 0.98 per cent to 12,056.44 units. At 12,074.06 index points, it marked a new record high.

Although the ADP labour market report on employment trends in the US private sector, which was published before the opening bell, fell far short of expectations, investors remained faithful to the optimism of recent weeks. The rally was driven in particular by the uninterrupted strong performance of technology stocks. It was some tech stocks in particular that kept the rally going.

Far East Markets at a glance

Asia’s stock markets were also on Wednesday trading in different directions. In Tokyo, the Nikkei 225 rose by 0.47 per cent to 23,247.15 points by the end of trading. On the Chinese mainland, however, the Shanghai Composite fell by 0.17 per cent to 3,404.80 points. In Hong Kong, the leading index Hang Seng declined by 0.26 per cent to 25,120.09 index units.

Asia’s stock markets did not find a uniform trend in the middle of the week, despite some positive news, according to which a corona vaccine may be available sooner than hoped for. But, investors are increasingly talking about the markets decoupling from economic reality.

European Markets at a glance

Europe’s stock markets rose in the middle of the week, in some cases sharply. The EuroSTOXX 50 climbed 1.84 per cent to 3,337.77 units.

The Dax was finally able to make the jump over the 13,000 mark on Wednesday. It ended the day with an increase of 2.07 per cent to 13,243.43 points. The TecDAX also ended up significantly higher, having started the day 0.46 per cent higher at 3,130.17 points. Ultimately, it gained 1.88 per cent to 3,174.25 index units.

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Europe’s stock markets recovered on Wednesday and received a tailwind from the strong performance of Wall Street. 

Forex, gold, oil and crypto

Even if the dollar is recovering today on the foreign exchange market against the euro, it remains fundamentally weak – which also benefits the US stock market, because American goods become cheaper for dollar foreigners. In any case, the Fed’s cemented zero-interest strategy will ensure that as soon as there is no more interest rate advance against the euro, which had long supported the greenback. The euro remained under pressure in late US Forex trading and was last quoted at 1.1825 US dollars, only slightly above its daily low. 

Oil prices fell sharply on Wednesday. Until the early afternoon, prices remained in the profit zone. In the course of afternoon trading, however, oil prices turned into the loss zone and fell sharply despite an unexpectedly sharp drop in US oil reserves. At 44.54 US dollars, a barrel of North Sea Brent cost 1.04 dollars less today. The US grade West Texas Intermediate (WTI) fell by 1.15 dollars to 41.61 dollars.

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The price of gold also fell more sharply in the afternoon as the US dollar strengthened. The troy ounce of the yellow precious metal is trading at $1,936, down more than 1.8 per cent on the daily chart.

Last but not least, cyber currencies, aka cryptocurrencies, also posted substantial losses as the greenback increased its value. Bitcoin fell by over 2 per cent to $11,200, Ethereum gave up 6 per cent to $425, and XRP declined by 4.5 per cent to $0.2680. The only gainer of the top digital assets was, Tron adding another 13.2 per cent to $0.0398 growing more than 67 per cent in the past seven days!

Corporate and world news

Economic data

Incoming orders for the US industry in July were up 6.4 per cent on the previous month. Economists had expected an increase of 6.2 per cent. For the last month, there was a plus of 6.4 per cent, as the US Department of Commerce further announced. An increase of 6.2 per cent had been provisionally reported. In July, the Ministry reported an increase of 11.4 per cent in orders received for durable goods, following a preliminary increase of 11.2 per cent. Order intake, excluding the defence sector, rose by 5.6 per cent. Orders excluding the transportation sector grew by 2.1 per cent. Orders for civil capital goods excluding aircraft, which are regarded as an essential indicator of corporate spending, climbed by 1.9 per cent. The previous month saw a 4.3 per cent increase.

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Private US companies increased their headcount in August much less than expected. As reported by the labour market service provider Automatic Data Processing Inc (ADP), 428,000 jobs were created compared to the previous month. In contrast, analysts had predicted an increase of 1,170,000 jobs. In July, 212,000 new jobs were created, 45,000 more than initially reported.

Commerzbank no longer wants auditor EY

The auditing company EY (Ernst & Young) is now also losing the audit assignment of Commerzbank due to the Wirecard accounting scandal. The Supervisory Board decided to propose to the 2021 Annual General Meeting that a change of auditor for the 2022 financial year be proposed, it was said.

On Tuesday, the Deutsche Bank subsidiary DWS had already announced that in future it would be relying on an auditor other than EY. However, Deutsche Bank does not intend to change its decision to have the balance sheet audited by EY in the future. EY had audited Wirecard’s balance sheets for a decade. Still, it was only in June 2020 that it discovered a 1.9 billion euro hole in the books of the now insolvent payment processor – after a special audit by competitor KPMG.

EuroStoxx 50 Update

In the current month, European market investors must prepare themselves for numerous new faces in the eurozone leading index EuroStoxx 50. In addition to the Vonovia real estate group, the payment service provider Adyen and the technology holding company Prosus will also be represented in the first European stock exchange league from September 21. The spirits manufacturer Pernod Ricard and elevator manufacturer Kone will also be included, as the index provider Stoxx announced late Tuesday evening in Zug (Switzerland). For this, the health care group Fresenius, the telecommunications groups Orange and Telefonica, as well as the banks BBVA and Societe Generale, will have to leave the index. 

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