January 18, 2021


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Recovery on European Stock Exchange Floors – Market Update

Recovery on European Stock Exchange Floors - Market Update

Source: ABM-FN

(ABM FN-Dow Jones) The European stock markets recorded a convincingly higher level on Tuesday around noon after the price decline on Monday.

The broadly based STOXX Europe 600 index rose 0.7 percent to 389.45 points, the German DAX rose 0.9 percent to 13,363.49 points and the French CAC 40 recorded an increase of 0.7 percent to 5,433. 38 points. The UK’s FTSE 100 was flat at 6,415.34.

“As is so often the case, stock markets got too pessimistic on Monday and the lack of liquidity at this time of year could lead to both up and down movements,” said Neil Wilson, analyst at Markets.com.

CMC Markets’ market analyst David Madden said investors were catching their breath on Monday after heavy losses. Then the stock markets fell sharply on news that a mutation in the coronavirus that is spreading faster has been discovered. The mutation is 70 percent more contagious than the previous variant. As a result, stricter restrictions were introduced in England.

CMC’s Madden warns of the risk that other countries are already affected by the new variant of the virus. “Countries turned their backs on the UK yesterday and it cannot be ruled out that other countries will receive such treatment in the near future,” Madden said. The mutation would also have been identified in Australia and Italy.

Belgium, the Netherlands and Ireland have introduced a travel ban to and from Great Britain, among others. France goes further and also bans cargo flights. On Monday there were long lines of trucks not allowed to leave the country and far fewer trucks entering the country.

According to investment manager Simon Wiersma, ING would give the country a “taste” if a trade deal were not signed with the European Union before January 1st.

According to the latest reports, UK Prime Minister Boris Johnson would like to make concessions on fisheries but disagreements would persist. “It doesn’t look like there will be a deal before Christmas, if only because the UK is already struggling to contain a new variant of the coronavirus,” said Danske Bank analysts.

ING expects an agreement to be reached at some point. “After all, everything becomes fluid under pressure. We have seen that so often in recent years, ”says Wiersma.

“Talks are ongoing, but in the short term the corona crisis will dominate the stock markets,” predicts Madden.

The euro / dollar pair is stable at 1.2226 this morning. Oil prices fell by around one percent.

The macroeconomic agenda becomes emptier towards the end of the year. Investors today still have an eye on the final quarterly US economic growth figures and US home sales in November.

Corporate news

Airbus may see $ 5 billion orders go up in smoke if AirAsia’s debt restructuring continues. The group has already built seven A330neo aircraft for AirAsia and another 71 are planned. The builder stated that terminating the contract will have an impact on profitability. The stock fell 0.7 percent on Tuesday morning.

The British telecommunications group Vodafone is making an offer in Germany for the remaining shares in Kabel Deutschland, which it does not yet own. Vodafone is offering 103 euros per share and wants to increase its current stake from 76.8 percent to at least 93.8 percent. Vodafone’s share in London fell by half a percent.

AstraZeneca fell 1.4 percent after the British pharmaceutical company and American Amgen announced that their experimental asthma drug tezepelumab had failed to meet its primary endpoints in a Phase III study.

It was mainly the stocks that hit Monday that showed a rally. For example, Air France-KLM gained 4.5 percent and Lufthansa one percent. ING was 2.3 percent more expensive and Deutsche Bank 1.3 percent. BNP Paribas gained 1.7 percent,

Futures Wall Street

The US stock markets are expected to open a little lower on Tuesday. Futures on the S&P 500 Index are listed in close green. The Nasdaq appears to open 0.3 percent higher.

The leading S&P 500 index closed on Monday at 3,694.92 points, down 0.4 percent. The Dow Jones Index rose 0.1 percent to 30,216.45 points, while the Nasdaq technology exchange lost 0.4 percent to 12,690.26 points.