Markets Update Wednesday 04/12/2019 – Hopes die last

Frankfurt – 04/12/2019

Hopes die last

One step forward and two back and then the same again the other way around… Were Trump’s remarks on Tuesday just tactics or are today’s media reports that everything now points to an imminent end to the trade dispute just a sham?

If you look at the whims of the market and investors today, you are inclined to believe that the end of the trade dispute could now still provide for the hoped-for end-of-the-year rally. In any case, investors were already in a party mood today and chased the markets worldwide northward. Whether this is renewed wishful thinking and if this belief is equal to believing in Santa Claus one must wait – but not for all too long because the ultimatum is running. 

US Markets at a glance

The Dow Jones was able to close midweek trading 0.54 per cent firmer at 27,651.67 points. The NASDAQ Composite also rose by 0.54 per cent. 8,566.67 points from trading.

After the Dow Jones had suffered losses the previous day, the market rose again on Wednesday. Despite the intensified political crisis, the talks between the USA and China are expected to continue constructively. The two major powers are making progress in their negotiations, the news agency Bloomberg reported, citing informed circles. US President Donald Trump’s remarks on Tuesday that an agreement could still drag on were not to be understood as meaning that the talks were stuck. Not so positive were comments that came across from China where officials remarked that “the US would do anything to push the stock markets higher”.

US President Trump was also more optimistic about the dispute with the European Union, which also helped the stock markets to get back on their feet.

Far East Markets at a glance

On the other hand, the trade dispute also weighed on the stock markets in Asia on Wednesday. Statements by US President Donald Trump continue to fuel fears of a renewed escalation. In Japan, the Nikkei fell by 1.1 per cent to 23,135 points. In Hong Kong, the Hang Seng also lost a good one per cent. The CSI 300 index with the 300 most important stocks on the Chinese mainland stock exchanges recently fell by 0.1 per cent.

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European Markets at a glance

The European stock exchanges made substantial gains on Wednesday. The EuroSTOXX 50 was quoted with little change to the sound of the starting bell but was able to climb strongly into positive territory in the day. In the end, a plus of 1.36 per cent stood at 3,660.02 points on the board.

The Parisian benchmark index Cac 40 advanced by around 1.3 per cent, and the Dax 30 closed 1.2 per cent higher at approximately 13,141 points.

Forex, gold, oil and crypto

The euro relinquished previous gains in late US currency trading on Wednesday. The most recent exchange rate for the common currency was USD 1.1069. Previously, the euro exchange rate in the European currency business had peaked at 1.1116 dollars, the highest level since the beginning of November. The European Central Bank (ECB) had set the reference rate at 1.1081 (Tuesday: 1.1071) dollars.

The British pound again recorded significant gains. Against the US dollar, it rose to its highest level since May of this year, against the euro the highest exchange rate since May 2017 was reached. The “kiwi” (NZD) also continued to gain on Wednesday, reaching around $0.6530 to last. 

The newly gained optimism was also reflected in the raw materials market: the price of Brent oil from the North Sea rose by 3.6 per cent to 63.63 dollars per barrel. According to stock market analysts, the oil price also benefited from speculation that Opec and its allies would agree to tighten their production brakes in the forthcoming consultations.

In contrast, investors withdrew from the “crisis currency” gold after the precious metal could even rise to $ 1.484 an ounce a day. The precious metal ended its rise for the time being and lost just under 0.3 per cent to 1,473 dollars per troy ounce. 

The most significant digital assets moved again only slightly on Wednesday, trading within a fairly tight range. One Bitcoin is currently valued at approximately $7,200, Ethereum at $146 and XRP at $0.2180.

Corporate and world news

Weakness in the US labour market

The private sector in the USA created significantly fewer jobs than expected in November. In total, only 67,000 jobs were created, as the employment agency ADP announced on Wednesday. This is the lowest increase since May. Experts, on the other hand, had expected an increase of 140,000 jobs. The data is regarded as a bad omen for the government’s labour market report due on Friday.

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On the other hand, corporate sentiment in the eurozone pointed to slight overall economic growth. The purchasing managers’ index surveyed by the research company Markit was 50.6 points in November as in the previous month, as Markit announced after a second survey round in London on Wednesday. An initial estimate had still resulted in a slightly lower value of 50.3 points.

Larry Page and Sergey Brin say goodbye!

Google boss Sundar Pichai will also head the parent company Alphabet in the future. Company founders Larry Page and Sergey Brin are stepping down from their respective positions as CEO and President with immediate effect, the Internet group announced on Tuesday. Now is the time to “take on the role of proud parents,” they wrote in a blog posting. They want to offer “advice and love”, but not “nag every day”. Both should continue to sit on the board of directors. After the announcement, the Alphabet share initially rose by 0.6 per cent. Page and Brin founded Google 21 years ago. Alphabet emerged from a restructuring in 2015.

Bayer awards billion euro contract to Cap Gemini

The IT service provider Cap Gemini has received an order worth more than €1 billion from Bayer.

Cap Gemini announced that the French are to help the German Bayer Group in its efforts to digitize and move to the cloud. Other areas of collaboration include resource planning, analysis and automation. The contract will run for six years.

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