Markets Update Wednesday 21/08/2019 – Spotlight on the Fed once again

Frankfurt – 21/08/2019

Spotlight on the Fed once again

Wednesday will be dominated by the Fed once again. The Fed will be releasing the minutes of its most recent interest rate meeting this evening. The German Landesbank Hessen-Thüringen (Helaba) is warning the dpa (German Press Agency) that the transcript may contain indications of the Fed’s future monetary policy. However, it is unlikely that Jerome Powell’s panel will further fuel high market expectations for further rate cuts.

Buyers on Wall Street ran out of breath on Tuesday night: The Dow Jones index is said to be 0.7 per cent lower at 25,962 points. The market-wide S&P 500 index and the technology exchange Nasdaq also posted similar losses.

Far East Markets at a glance

In the middle of the week, no clear direction can be discerned on the stock markets in the Far East. The Japanese leading index Nikkei is currently losing 0.32 per cent to 20,611.98 units.

On the Chinese mainland, on the other hand, the indices are gaining moderately. While the Shanghai Composite is gaining 0.11 per cent to 2,883.14 points, the Hang Seng in Hong Kong is up 0.10 per cent to 26,258.69 points.

European Markets at a glance

The EuroSTOXX 50 started firmer in the day and is currently sitting at around 3,366 points. The German DAX also started the day with a gain of 0.19 per cent at 11,673.66 points. The TecDAX also showed a plus when the starting bell rang.

The government crisis in Italy is another negative factor for European trade that needs to be kept in check. After the end of the government, Prime Minister Giuseppe Conte has since announced his resignation. Lega leader Matteo Salvini had previously declared the alliance with the 5-star movement unfit for work and is aiming for new elections.

Forex, gold, oil and crypto

The situation in Italy is also affecting the euro in the currency market. The common currency slipped below the 1.11 dollar mark in the morning and is currently trading at 1.1090 dollars. 

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Overall, the foreign exchange market remains confined in tight ranges this week. Traders and investors await today’s FOMC minutes because further monetary policy steps by the Fed could be derived from this. And on Friday, a speech by central bank chairman Jerome Powell at the central bank meeting in Jackson Hole in the USA is eagerly awaited.

There was little movement in the commodity market, however. The price for a barrel North Sea oil is easily in the plus with 60,50 dollar. The troy ounce of gold has increased in value somewhat to 1,502 dollars.

Cryptocurrencies took another hit on Tuesday with most of the major digital assets losing more than 5 per cent in value. A Bitcoin is currently traded at just above the $10,000 mark, while one XRP (Ripple) costs $0.2660.  

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One reason for the sudden fall in crypto prices could be Facebook’s Libra coin once again. According to a media report, EU competition authorities are investigating possible problems with Facebook’s planned cryptocurrency Libra. There is a concern that this competition would be locked out in an inadmissible way, the Bloomberg agency reported on Tuesday, citing a document before it. Also, a possible interlocking of Libra with services of the US group such as WhatsApp and Messenger is being analyzed. Facebook and the EU Commission rejected comments. The Internet company announced in June that it intended to introduce digital money in the first half of 2020. The project has met with scepticism among financial supervisors worldwide.

Corporate news

Customer growth for Global Fashion Group

In the second quarter, the Global Fashion Group, a newcomer to the stock exchange, increased its turnover and the number of its customers. The online fashion retailer’s revenues increased by 15 per cent to EUR 342.4 million, while adjusted operating profit reached EUR minus 3.2 (previous year: minus 2.5) million. The number of customers rose by 14.6 per cent to twelve million. The Management Board is confident that it will achieve its annual targets, which envisage revenues of over 1.3 billion euros. Besides, the company wants to come closer to making a turnaround in earnings.

Walmart sues Tesla

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After fires in about seven markets, the US retailer sued the electric car pioneer and solar system manufacturer Tesla. According to the court documents published on Tuesday, the solar systems triggered the fires, which caused significant damage. It was a breach of contract and a consequence of years of neglect. Tesla had designed, installed and promised to operate the systems safely on the roofs of hundreds of Walmart supermarkets. Walmart has equipped some 240 supermarkets with SolarCity solar panels, which were acquired by Tesla in 2016. Tesla initially did not respond to a request for comments.

Zur Rose blossoms

The mail-order pharmacy achieved a sales increase of 28.1 per cent to 771.8 million Swiss francs. Excluding the recently acquired medpex, sales increased by 12.9 per cent.

According to the Group, this enabled it to significantly expand its leading position as Europe’s largest mail-order pharmacy. The Ebitda margin improved from minus 1.5 per cent to minus 0.4 per cent. The loss before taxes and interest was CHF 17.1 million.

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