Markets Update Wednesday 30/06/2021 – The First Half

Frankfurt – 30/06/2021

The First Half

On Wall Street, the interplay between standard and technology stocks continued today. Standard stocks were in greater demand again on Wall Street today, while technology stocks, which have recently been so accustomed to success, consolidated at a high level. 

Even though the last day of the first half of the year on the Street was mixed today, the review of the first half of the year is impressive. Equities were the clear favourites of investors. The upswing was mainly achieved by the prospect of a strong economic recovery after the crisis, coupled with high liquidity from the central bank. The Dow Jones gained 12.7 per cent in the first six months, after all, and the technology exchange Nasdaq rose by 12.5 per cent. The broader S&P 500 index, which is the key measure of institutional investors’ performance, even advanced by 14.4 per cent. It is the best half-year performance in more than 20 years.

Investors, however, were reluctant to make further, bigger bets in the stock market because of the labour market data due on Friday. There, job creation in the private sector has weakened significantly.

US Markets at a glance

The Dow Jones opened the session almost unchanged and then climbed up 0.61 per cent to 34,502.51 points. Meanwhile, the tech index NASDAQ Composite trended weaker, ending Wednesday’s trading session 0.17 per cent lighter at 14,503.95 points, after starting the session slightly lower. The market-wide S&P 500 index managed to reach its fifth record high in a row at 4,302.90 points very shortly before the close of trading. The index closed just below that at 4,297 points and 0.12 per cent higher.

According to traders, the corona infection figures, which are rising again in some places, dampened the recently increased confidence in a recovery of the global economy. According to the World Health Organisation, the number of reported corona infections rose slightly last week for the first time since mid-April.

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Ahead of the official labour market report on Friday, the labour market service provider ADP report came in as mixed. Job creation in the private sector has weakened considerably, but not as much as analysts had feared. 

Far East Markets at a glance

The Asian stock exchanges were unable to agree on a common direction in the middle of the week. In Tokyo, the Japanese benchmark index Nikkei ultimately fell by 0.07 per cent to 28,791.53 points. In mainland China, the Shanghai Composite gained 0.50 per cent to 3,591.20 points. In Hong Kong, however, Hang Seng posted losses of 0.57 per cent to 28,827.95 points.

New records from Wall Street partly drove the prices of the Asian indices. Hopes for a very quick economic recovery after the pandemic also made investors optimistic, wrote Deutsche Presse-Agentur. However, worries about the highly contagious delta variant diminished the confidence of market participants.

European Markets at a glance

The European stock markets went down on Wednesday. The EuroSTOXX 50 opened close to its previous day’s closing price but lost considerable ground in the day and ended the day 1.05 per cent weaker at 4,064.30 index units.

The DAX started the session in Frankfurt hardly changed but then fell deeply into the red and at times moved below the 15,500-point mark. However, in the course of the session, it was able to stem its losses somewhat and closed 1.02 per cent lower at 15,531.04 points. The TecDAX started the day slightly up but could not maintain its gains and slipped into red territory. It ended the Wednesday trading session with a loss of 1.15 per cent to 3,564.07 points.

The focus of the last trading day of the first half of 2021 was on the US employment figures of the private employment agency ADP. This will be followed on Friday by the official statistics on the state of the US labour market. Shortly after the start of trading, the German Federal Employment Agency published the corresponding data for Germany. Here, unemployment fell more than expected in June. 

Forex, gold, oil and crypto

The euro continued to lose value on the forex market today. Around an hour before the close of trading on Wall Street, the common currency cost 1.1850 US dollars, having come under pressure in European business already. The appreciating dollar primarily burdened the euro. The Agreenback benefited from the rather gloomy stock market sentiment in Europe. 

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Oil prices rose on Wednesday ahead of an important meeting of major producers. The barrel of Brent climbed 38 cents to 75.14 dollars, while. WTI light oil rose 77 cents to 73.75 dollars.

The gold price recovered after yesterday’s fall and closed approximately $8 higher at $1,769 per troy ounce.

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The cryptocurrency market painted a mixed picture with Bitcoin’s price consolidating around $35,000, while altcoins trended in different directions. Ethereum, for example, was able to appreciate by another 4.1 per cent to $2,255, while Dogecoin fell 3.3 per cent to $0.25. One of the major gainers was the Defi platform Solana which rose 6.1 per cent to $35.30. XRP and Cardano held steady at $0.70 and $1.37, respectively. 

Corporate and world economic news

Economic data

The cost of living in the eurozone increased by 1.9 per cent within a year, as the statistics authority Eurostat announced in a first estimate. Economists had expected this rate. Consumer prices had still risen by 2.0 per cent in May, which was the highest inflation rate since autumn 2018. As in the previous month, inflation in June was mainly driven by energy prices. The European Central Bank (ECB) aims for an inflation rate of just under two per cent as the optimal value for the economy.

In the USA, job creation in the private sector has weakened significantly. According to the labour market service provider ADP in Washington, 692,000 new jobs were added in June. Analysts, on average, had expected an even more substantial slowdown to an increase of 600,000 new jobs. In the previous month, a revised 886,000 jobs (previously 978,000) had been created. The ADP figures are considered an indicator for the official labour market data released on Friday.

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