Markets Update Wednesday 27/10/2021 – Euphoria Slow-Down

Frankfurt – 27/10/2021

Euphoria Slow-Down

As on the previous day, investors withdrew even more from the stock market in late trading on Wall Street. While standard US stocks ultimately fell more sharply, the Nasdaq technology exchange managed to survive the day to some extent better.

While US tech stocks continue to climb, the situation on the broad market is more varied. Overall, however, investors are becoming more cautious because of the Fed’s expected reduction in securities purchases in the near future.

The stock exchanges in Asia had already fallen in the morning, as they are currently also burdened by news about the telecom company China Telecom. The USA has banned the company from the US market because of security concerns. China Telecom has to stop its services in the USA within 60 days, as the Federal Communications Commission (FCC) announced. The FCC cited that the Beijing government could use the company to intercept or interfere with US communications and “conduct espionage and other harmful activities against the United States”. However, the impact on markets was small, unlike in Asia.

Tomorrow, another spate of quarterly reports is on the agenda, including online retailer Amazon and coffee house chain Starbucks releasing their books. But also Apple after the close.

US Markets at a glance

The Dow Jones opened the trading session slightly firmer but then fell back into the red. It ultimately posted losses of 0.74 per cent to 35,490.69 points. Meanwhile, the NASDAQ Composite tech index closed almost unchanged at 15,235.84 points.

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Among the individual stocks, Microsoft, Visa, Google and Twitter were in the focus of investors with figures. The ongoing reporting season had already provided impetus in recent days and pushed the US indices to new highs.

Far East Markets at a glance

Asia’s largest stock markets came under pressure today. In Japan, the Nikkei index closed with a loss of 0.03 per cent at 29,098.24 points. On the Chinese mainland, the Shanghai Composite lost 0.98 per cent to 3,562.31 units by the end of trading, while the Hang Seng fell 1.57 per cent to 25,628.74 points in Hong Kong.

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Concerns about China’s property market and high inflation worldwide weighed on investor sentiment. Besides Evergrande, other real estate companies also have liquidity problems.

European Markets at a glance

Europe’s markets stood still on Wednesday. The EuroSTOXX 50 started the day slightly lower and closed 0.07 per cent lower at 4,220.88 points.

The German indices, on the other hand, fell more sharply. The DAX opened with a small minus and closed 0.33 per cent weaker at 15,705.81 points. The TechDAX lost 0.9 per cent to 3,813.57 points, having already started with a minus.

Uncertainty and indecision are currently evident in the European market. The decisive factor for this, he said, was not least the sharp rise in yields on Bunds and US bonds. According to market experts, in addition to the current inflationary pressure, this also exacerbates concerns about rising interest rates in Europe and the USA.

In addition, three DAX companies – Deutsche Bank, BASF and PUMA – published quarterly figures today.

Forex, gold, oil and crypto

The euro continued to hover around the USD 1.16 mark on Wednesday ahead of the upcoming interest rate decision by the European Central Bank. In New York business, the common currency last cost 1.1610 US dollars in foreign exchange trading.

Oil prices widened their losses today to up to 2.0 per cent and thus fell more noticeably after a long time. On the one hand, market observers explained the price reductions with a rather gloomy mood on the stock markets. This had dragged down other riskier asset classes such as commodities. In addition, there was oil inventory data from the USA: the American Petroleum Institute (API) had reported a significant increase in nationwide oil inventories. The oil-producing country Iran will also resume nuclear negotiations in Vienna next month. Brent crude cost 84.71 US dollars at the close of trading, while WTI traded for 83.05 dollars.

Gold traded in a fairly narrow range and ultimately posted a $5 gain to $1,798.

As expected by numerous chart analysts, Bitcoin and the entire cryptocurrency market was hit with a significant correction. Bitcoin dropped 3.6 per cent to $58,600, while Ethereum, the number one altcoin, shed 5 per cent to $3,969. As it has happened countless times in the past, when BTC tumbles, the rest of the market follows, and altcoins are typically hit harder too. Binance Coin lost 6 per cent to $450, Cardano and XRP plummeted by over 10 per cent to $1.94 and $1, respectively. Similarly, other alts also dropped between 8 and 12 per cent, while Shiba Inu seems unstoppable at the moment, adding another 70 per cent on the daily. 

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Corporate and world economic news

Economic data

Turnover in Germany’s commercial economy increased in September compared to the previous month. As the Federal Statistical Office announced based on advance turnover tax returns, it increased by 1.2 per cent compared with last month. For the entire third quarter, this results in an increase of 3.4 per cent.

German import prices rose strongly in September, mainly due to the cost of natural gas and crude oil. As reported by the Federal Statistical Office, total import prices rose by 1.3 per cent compared to the previous month, versus 1.5 per cent expected. Year-to-date, import prices were 17.7 per cent higher. This is the highest annual rate since August 1981, when prices rose sharply with the second oil price crisis. 

According to the recent analysis of the GfK consumer research, the consumer climate in Germany is increasing again. Contrary to economists’ expectations, their indicator rose to 0.9 points in November from a revised 0.4 points in the previous month.

New orders for durable goods in the USA fell in September. As reported by the US Department of Commerce, orders decreased by 0.4 per cent compared to the previous month. Economists surveyed by Dow Jones Newswires had expected a more significant decline of 1.0 per cent. 

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