Markets Update Wednesday 19/01/2022 – Goodbye, Good News!

Frankfurt – 19/01/2022

Goodbye, Good News!

Despite good company results, there were long faces on Wall Street today. In the last minutes of trading, there was intense selling pressure. As is often the case when prices weaken, interest rate concerns were cited as the reason. The pattern with which the stock markets react to the prospect of rising interest rates could be observed again during the day. While the Dow Jones blue chips only fell slightly after the hectic end of trading, the Nasdaq-100 once again slid sharply.

Inflation and the interest rate turnaround also remain a big topic in Europe. The bankers at the ECB are currently seeing themselves under increasing pressure to tighten the interest rate reins more strongly. So far, no interest rate hikes are expected for the eurozone this year. But if inflation continues at this pace, the monetary policymakers in Frankfurt will also have to act against their will. This expectation is currently reflected in the foreign exchange market, where the euro recovered somewhat from yesterday’s losses.

US Markets at a glance

On Wednesday, investors lost their initial courage. The Dow Jones began the session a little firmer but quickly turned negative, finally closing 0.96 per cent lower at 35,028.65 points. The tech index NASDAQ Composite also started higher but then also took a downward turn. It ended the trading session 1.15 per cent lower at 14,340.26 points.

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Market participants focused particularly on the reporting season, which is slowly gaining momentum. Bank of America, Morgan Stanley, Procter & Gamble and UnitedHealth already presented their figures before the market opened.

Far East Markets at a glance

Most of the stock markets in the Far East fell sharply in the middle of the week. In Japan, the Nikkei plummeted by 2.80 per cent to 27,467.23 points by the end of trading. On the Chinese mainland, the Shanghai Composite ultimately lost 0.33 per cent to 3,558.18 points, whereas the Hang Seng in Hong Kong was able to climb just into positive territory in late trading, gaining 0.06 per cent to 24,127.85 units.

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With the partly significant price losses, the indices in the Far East followed the US stock markets downwards, which suffered from enormously increased bond yields. Concerns about a rapid tightening of the monetary policy spread again due to high inflation.

European Markets at a glance

The European stock markets recovered on Wednesday after a weak opening. The EuroSTOXX 50 lost some ground at the start but was ultimately able to gain 0.25 per cent to 4,268.28 points.

The DAX was also able to recover its initial loss and even turn significantly positive. In late trading, however, the gains were somewhat smaller again, and at the close of trading, it was still enough for an increase of 0.24 per cent to 15,809.72 points. The TecDAX was also able to shake off its losses the day after starting trading lower. It eventually posted gains of 0.75 per cent to 3,527.93 points.

After a weaker opening, Europe’s stock markets held their ground.

Forex, gold, oil and crypto

On Wednesday, the euro continued to recover from its previous day’s losses in late US FX trading. The single currency euro was last quoted at 1.1351 US dollars. 

Oil prices continue to rise and rise. The Brent North Sea crude price approached the $89 per barrel mark, another seven-year high. The drone attack by Yemeni Huthi rebels on Abu Dhabi continued to have an impact. Investors’ nervousness is exacerbated by tensions between Russia and Ukraine.

In the afternoon, the price of gold made a strong come back and reached its highest level since November at over 1,840 troy ounce dollars. The movement can be explained on the one hand by the current risk aversion of investors, who are selling off technology stocks and switching to supposedly safer investments such as bonds or precious metals. Other reasons are likely to be the global inflationary tendencies and geopolitical uncertainties.

Cryptocurrencies posted losses but overall continued their sideways movement. Bitcoin traded 1 per cent lower at $41,800, while Ethereum dropped 1.2 per cent to $3,120. Cardano declined by a further 9 per cent to $1.34, therefore almost irradicating its weekly gains entirely. Still, ADA looks bullish, and with the launch of the SundaeSwap ADA DEX, we should see the next leg up soon. 

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Corporate and world economic news

Economic data

In the German industry, on hand orders continued to rise in November and reached a new record level. Compared to October 2021, it increased by 1.5 per cent, as reported by the Federal Statistical Office. Highs had already been marked in June, July, August and September. The order backlog is at its highest level since the statistics were introduced in January 2015. Open orders from Germany increased by 0.8 per cent in November and those from abroad by 1.8 per cent.

As measured by the harmonised consumer price index (HICP), inflationary pressures in Germany eased slightly in December at a high level. As the Federal Statistical Office announced today, the HICP fell to an annual rate of 5.7 (previous month: 6.0) per cent. The statisticians thus confirmed – as expected by economists – their preliminary estimate of 6 January.

The upward trend in prices in Great Britain is getting stronger. In December, consumer prices rose by 5.4 per cent compared to the same month last year, as the national statistics office ONS announced in London on Wednesday. This is the highest rate since the survey began in 1997. In previous years, the last time the rate was higher was in 1992, according to model calculations by the ONS. Analysts’ expectations of 5.2 per cent were therefore exceeded.

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