Markets Update Wednesday 06/11/2019 – Just a breather?

Frankfurt – 06/11/2019

Just a breather?

Following the strong start in November, the stock markets are making little progress and investors are becoming increasingly cautious. The risk-appetite is receding, and giant leaps are no longer discernible. The long-awaited trade deal between China and the USA is being delayed, or will it even fail?

Accordingly, more and more market observers are showing skepticism. Analyst Chris Beau-champ of the brokerage house IG expects price setbacks in the short term. Slowly, the assessment that the market has risen too fast is gaining ground. 

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It is truly a game of nerves. Time and again, a rapprochement has been announced in the customs dispute between Beijing and Washington. The trade treaty is almost ready, it was said at last. But so far nothing has happened. It is still possible that the so-called Phase 1 agreement will not be concluded, an insider said. But it is more likely that it will be achieved. A meeting between US President Donald Trump and Chinese Head of State Xi to sign the agreement could perhaps be postponed until December.

US Markets at a glance

The back and forth in the customs dispute slowed the buying mood of Wall Street investors. The Dow Jones had already started the day around the zero line and hardly got off to a good start. It then closed unchanged at 27,492.23 points. The tech stocks index NASDAQ Composite had started the day somewhat lower and remained in the loss zone afterwards. It left trading 0.29 per cent lighter at 8,410.63 points.

Far East Markets at a glance

The stock markets in Asia showed no common trend in the middle of the week.

In Japan, the Nikkei was 0.22 per cent higher at 23,303.82 points at the end of trading. On the Chinese mainland, the Shanghai Composite fell by 0.43 per cent to 2,978.60 points. The Hang Seng in Hong Kong recorded a marginal plus of 0.02 per cent to 27,688.64 points.

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European Markets at a glance

Europe’s most important stock markets were friendly on Wednesday.

The EuroSTOXX 50 was able to convert its initial minus into a green sign. It went 0.33 per cent stronger into the evening at 3,688.74 units.

The German Dax 30 started the day only marginally firmer and fluctuated between zero and small gains in the course of trading. In the end, it recorded a premium of 0.24 per cent to 13,179.89 points. At the daily high, it climbed to its highest level since May 2018. After a barely turbulent start, the TecDAX moved into the profit zone and closed the meeting 0.2 per cent higher at 2,907.24 points.

Since the beginning of October, the Dax has gained almost eleven per cent. This is the strongest rally in about three years.

Forex, gold, oil and crypto

The euro has regained momentum on the currency market. The 1.11 dollars mark, which was undercut yesterday, is not too far away at currently 1.1089 dollars. Oil prices on the commodities market have fallen slightly. At 56.95 dollars, a barrel of the US grade WTI now costs half a per cent less than yesterday. 

The gold price is almost unchanged, the fine ounce of the precious metal is quoted at 1,486 dollars.

There was again little movement on the cryptocurrency market today. Bitcoin is currently stagnating between $9,300 and $9,400, while the numbers 2 and 3 in terms of market cap are rising slightly. Ethereum is currently set at $190 and XRP at $0.3020. 

After yesterday’s massive 20 per cent rise in Stellar Lumens, the XRP rival currency lost over 5 per cent today.

Corporate and world news

Trade deal between USA-Great Britain after Brexit

US President Donald Trump and British Prime Minister Boris Johnson have spoken in a telephone conversation about the trade relations of both countries after the upcoming Brexit. Both sides have reaffirmed their intention to follow Britain’s withdrawal from the EU with a “robust” bilateral trade agreement, the White House said in Washington. As long as the United Kingdom is still a member of the European Union, it cannot conclude such an agreement. 

BMW with spectacular third quarter

After a difficult start to the year, BMW has had an outstanding quarter. Earnings before interest and taxes increased by 32.9 per cent to 2.29 billion euro compared to the weak prior-year period. This was a much stronger increase than analysts had previously expected. The highly regarded operating margin in the core automotive business rose by 2.2 percentage points to 6.6 per cent. Between July and September, Group sales grew by 7.9 per cent year-on-year to 26.7 billion euros, with the bottom line of 1.55 billion euros, 11.5 per cent more profit. Management confirmed its forecast.

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UniCredit sells stake in Mediobanca

Italian UniCredit sells its Mediobanca shares. UniCredit announced that it would sell around 8.4 per cent of Mediobanca shares to institutional investors. The placement process will start immediately. The proceeds will be invested in the development of customer business.

Softbank gambles away

The Japanese technology investor Softbank has gambled away and, for the first time in 14 years, posted a quarterly loss of billions. As its investments in the US office lessor, WeWork and its taxi rival Uber lost value, an operating loss of 6.5 billion dollars accumulated between July and September. In the previous year, there had still been an operating plus of this magnitude on the books. Analysts had expected only a fraction of the loss in advance. After the failed IPO of WeWork, Softbank buttered more than ten billion dollars into the company.

Barrick in the Gold Rush

The rise in the gold price has boosted Barrick Gold. The company doubled its profit to $0.15 per share thanks to higher production. The shares of the Canadian precious metal prospector rose by 3.7 per cent.

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