Markets Update Wednesday 18/11/2020 – Unified Undecidedness

Frankfurt – 18/11/2020

Unified Undecidedness

The stock markets are still rumbling, looking for a clear direction: The hopes of being able to access an effective vaccine against the coronavirus soon support the hope and fantasy of the investors. On the other hand, there is the immediate situation in many countries of the world, where restrictions and often severe cuts in daily life and the economy prevail.

US Markets at a glance

In the middle of the week the bears dominated on Wall Street.

The Dow Jones started trading firmer, but fell back to red territory intraday, finally giving away 1.16 per cent to 29,438.42 points. The NASDAQ Composite showed little movement at the start. However, it also recorded declines over the trading day, ending the session down 0.82 per cent at 11,801.60 points.

Once again, there was hope for progress in the search for corona vaccines: BioNTech and Pfizer again presented encouraging data. The two pharmaceutical companies announced that their product is 95 per cent effective. However, concerns remained about the ongoing economic impact of the corona pandemic and the continuing increase in the number of infections.

Among the US stocks, Boeing was the focus of market participants. The crisis aircraft 737 Max is now allowed to take off again.

Far East Markets at a glance

Asia’s stock markets presented a mixed picture on Wednesday. The Japanese leading index Nikkei 225 dropped 1.1 per cent to 25,728.14 points by the end of trading while, on the Chinese mainland, the Shanghai Composite rose by 0.22 per cent to 3,347.30 points. In Hong Kong, the leading index Hang Seng ultimately also posted a plus, climbing 0.49 per cent to 26,544.29 units.

According to market participants, the mood on the Asian stock markets was surprisingly robust at midweek. Increasing concerns about the rising numbers of corona infections in many places contrasted with hopes for a vaccine. Compared to Europe and America, however, the corona situation in Asia remains calmer.

European Markets at a glance

The European stock exchanges recorded moderate gains in the middle of the week. The EuroSTOXX 50 rose by 0.39 per cent to 3,482.17 points. 

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After a weak start, Germany’s leading index, the Dax 30, also gained ground, ultimately rising by 0.52 per cent to 13,201.89 points. The TecDAX also trended higher, having barely begun the trading day with any movement. The closing level was 0.56 per cent higher at 3,016.94 units.

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In Europe, too, concerns about the rising number of corona infections continue to be countered by the hope for an early vaccine. Besides, statements by Jerome Powell, head of the Federal Reserve, put some pressure on the mood. According to Powell, the further spread of the coronavirus represents a major risk for the development of the economy in the coming months.

Meanwhile, eurozone inflation remained pessimistic in October. As the statistics authority informed Eurostat, consumer prices were 0.3 per cent lower than in the same month last year.

Forex, gold, oil and crypto

The euro showed little movement in US trading on Wednesday. In early trading in Frankfurt, the European common currency had initially risen almost to 1.19 US dollars before it then weakened again. The European Central Bank (ECB) had set the reference rate at 1.1868 (Tuesday: 1.1882) US dollars. 

Meanwhile, the British pound is gaining against the dollar and euro on the Forex market. Market observers referred to recent media reports that raise hopes for a trade agreement between the European Union and Great Britain after the Brexit. The Irish Prime Minister, Michael Martin, had also recently promised a successful conclusion of the negotiations on a Brexit trade pact.

Oil prices rose on Wednesday. Prices were supported by hopes of stronger demand for crude oil in Asia. Market observers pointed to refinery operators in China, Japan and South Korea, who had recently made increased purchases. Accordingly, Brent oil rose 80 cents to 44.52 US dollars per barrel. For WTI light oil 42.00 dollars per barrel were paid today, 57 cents more than on Tuesday.

The troy ounce of gold is trading slightly lighter at $1,872.

After an impressive rally in the last days and weeks, the cryptocurrency market took a bit of a hiatus today. Bitcoin had crossed the $18,000 mark but came back down by 0.57 per cent to $17,700. Ethereum and XRP remained relatively stable as well trading around the $475 and $0.29 marks respectively. 

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Corporate and world economic news

Economic data

Prices in the eurozone continued its fall in October. Compared to the same month last year, consumer prices were 0.3 per cent lower, according to a second publication by the statistics authority Eurostat. As expected by economists, it thus confirmed its initial estimate of October 30. Prices had also fallen by 0.3 per cent in September.

New construction activity (building permits) in the USA expanded in October. The number of ground-breaking ceremonies rose by 4.9 per cent compared to the previous month to an extrapolated annual figure of 1.53 million. Economists had predicted an increase of 2.5 per cent.

Japan’s export economy continued to recover from the corona shock in October, mainly due to its profitable business with China. Exports of the world’s third-largest economy fell by only 0.2 per cent compared with the previous year, the government announced in Tokyo on Wednesday. On average, experts had expected a significantly higher decline. This is also the best figure since November 2018.

Deutsche Börse Group invests

Deutsche Börse is venturing a billion-euro purchase. The Dax Group is buying the US voting rights advisor Institutional Shareholder Services (ISS), Deutsche Börse announced on Tuesday evening. Deutsche Börse will acquire 80 per cent of the data company from financial investor Genstar Capital. This is based on a valuation of EUR 1.925 billion without debt. Deutsche Börse intends to pay for the deal with one billion in debt and cash. The Deutsche Börse share was slightly stronger in the after-market. Deutsche Börse expects ISS to generate net proceeds of more than 280 million US dollars in the current year. It also expects additional earnings before interest, taxes, depreciation and amortization (Ebitda) of €15 million per year by 2023.

German Federal Government with “Spendierhosen”

Extra purchase incentives for electric cars until 2025, new subsidies for cleaner trucks, more electric filling stations: Amid the corona crisis, the state is giving the German automotive industry a further boost for the change to more climate-friendly vehicles. At a summit meeting between Chancellor Angela Merkel and industry representatives on Tuesday evening, the German government pledged an additional three billion euros. The industry and the IG Metall union welcomed the support and are pressing for rapid implementation in the tense market situation. Auto shares are trading slightly better in the morning.

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