Markets Update Wednesday 22/01/2020 – From high to low

Frankfurt – 22/01/20

From high to low

A new all-time-high for the leading German index Dax 30 was in the air for the last few weeks. Many market participants speculated that a new record-high would show on the board soon – and they were right. Today was the day when the Dax shot up to a new best mark of 13.640 points before it was pushed back heavily and even closed the day in the red. 

Profit-taking, but also the fear of new car tariffs and a virus epidemic caused the stock exchanges problems.

US Markets at a glance

On Wednesday the US stock markets recovered somewhat from the previous day’s losses but were unable to maintain the gains made in the meantime.

The Dow Jones started off somewhat firmer and remained moderately above the zero line for a long time. At the end of trading, however, the stock market barometer showed a small loss of 0.03 per cent to 29,186.27 points. The NASDAQ Composite rose significantly in the meantime. Like the S&P 500, it marked a new all-time high. The NASDAQ Composite ended the day 0.14 per cent higher at 9,383.77 points.

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Fears of a pandemic, which were still firmly in control of Wall Street on Tuesday, eased somewhat on Wednesday. This is probably also due to assurances from China that it had taken the necessary preventive measures.

On the corporate side, the reporting season has currently picked up speed: Netflix and IBM had opened their books after hours on Tuesday, while Johnson & Johnson followed suit on Wednesday before trading started.

Far East Markets at a glance

In Asia, the stock markets have risen broadly. 

In Tokyo, the Nikkei closed 0.70 per cent stronger at 24,031.35 index points. In China, too, the stock markets went up again. On the Chinese mainland, the Shanghai Composite recorded an increase of 0.28 per cent by the end of trading, closing at 3,060.75 points. In Hong Kong, the Hang Seng also gained 1.27 per cent to 28,341.04 index points.

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European Markets at a glance

European stock markets were cautious on Wednesday. The EuroSTOXX 50 fell into the loss zone in trading, after a minimal rise at the start. Thus to ring the closing bell, a decline of 0.52 per cent to 3,769.40 points was recorded.

After the leading German index had set a new best value of 13,640 points in the morning, the index immediately started to decline again. At the close of the trading floor not only did the index fall well below the 13,600 point mark, but the Dax even ended the record day down 13,515 points.

Forex, gold, oil and crypto

Der Euro hat sich von seinen Tagestiefstständen etwas erholt, bleibt aber unter der Marke von 1,11 Dollar mit derzeit 1,1086 Dollar. Die Europäische Zentralbank (EZB) hatte den Referenzkurs zuletzt am Dienstagnachmittag etwas höher auf 1,1115 (Montag: 1,1085) Dollar festgesetzt.

On the back of surprisingly positive figures from the CBI Business Manager Index in the UK, the British Pound gained strongly and finished trading just below $1,31500.

Oil prices widened their initial losses on Wednesday. A barrel (159 litres) of North Sea Brent crude last cost 63.11 US dollars. That was 1.49 dollars less than the previous day. The price of American WTI crude oil fell by USD 1.50 to USD 56.91. The further situation in Libya on the oil market continues to be monitored. Diplomatic efforts are currently underway to contain the civil war in the Opec country.

The gold price is trending slightly upwards at $ 1,560 an ounce.

The cryptocurrency market sees overall minor losses with Bitcoin losing almost 1 per cent to $8,650, Ethereum falling by 1.28 per cent to $167 and XRP losing 0.9 per cent to $0.2346.

Corporate and world news

US home sales higher

In the US, sales of existing homes rose more than expected in December. Compared to the previous month, they rose by 3.6 per cent, according to the National Association of Realtors (NAR) in Washington on Wednesday. Analysts had expected an average increase of only 1.5 per cent.

Tesla share in price frenzy

The record rally of Tesla shares did not come to an end on Wednesday either. After a rise of more than 7 per cent the day before, the shares now rose by another 6 per cent. With a price of 580 US dollars per share, Tesla was worth more than 100 billion US dollars for the first time in its almost ten-year stock market history. In the end, the share price in NASDAQ trading was 4.09 per cent higher at 569.56 US dollars.

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Tesla has overtaken Volkswagen, the second most valuable carmaker to date, at a rapid pace thanks to the price rally since the end of October. The Wolfsburg-based company currently has a market value of almost 100 billion dollars. However, Toyota remains the clear leader with a market value of more than 230 billion dollars.

A good mood was created on Wednesday by, among other things, an analyst commentary: The experts of the Wedbush analysis house had tightened their target for the shares from 370 to 550 US dollars. The day before, analyst Pierre Ferragu of New Street Research had even considered a Tesla price of up to 1700 dollars possible with a view to the coming years – but only in the best conceivable of all possible scenarios.

Auto industry expects shrinking sales in Europe

The automotive industry expects a two per cent drop in sales in Europe this year. This would be the first drop in passenger car sales after six years of growth, the European manufacturers’ association ACEA announced in Brussels on Wednesday. In 2019, sales across the EU had still increased by 1.2 per cent to more than 15.3 million new cars.

ACEA President and Fiat-Chrysler CEO Michael Manley said in Brussels that, given the shrinking market, the framework conditions for the path towards more environmentally friendly vehicles must be right. Politicians should not prescribe or ban any drive system. For vehicles with alternative drives, sufficient charging stations and gas stations must be created throughout the EU.

The goal of carbon dioxide-neutral road traffic could be achieved by the year 2050, Manley said. The association’s president presented a ten-point plan for implementing the so-called European Green Deal, in which the 16 largest car manufacturers set out how they intend to reduce CO2 emissions as effectively as possible.

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