Düsseldorf How will the German share index develop on Thursday? Investors took the opportunity to get back into the business on Wednesday. Dax and Euro Stoxx 50 each gained around two percent. Investors also returned to Wall Street. Many investors are puzzling whether the sell-off is over or just interrupted. In any case, on Thursday morning it looked like a clear recovery: on OTC trading platforms, the Dax was clearly up by more than 2.5 percent at 13,256 points.
The focus of market participants today is primarily on the European Central Bank (ECB). Europe’s monetary authorities are bracing themselves with billions against the unprecedented economic crisis as a result of the corona pandemic. Economists assume that the ECB will initially not expand its crisis program at its council meeting this Thursday, despite the alarmingly low inflation.
The monetary policy stance of the ECB also affects the euro exchange rate. Since the beginning of June, the European common currency has appreciated by around six percent compared to the US dollar. This is a problem for the central bank: On the one hand, the strength of the euro makes exports from Europe more expensive elsewhere, which tends to weaken growth – on the other hand, it makes imports cheaper and thus pushes the already low inflation in the euro area even further down
1 – Trade in the United States
After a three-day downturn, investors returned to Wall Street on Wednesday. The US standard value index Dow Jones closed 1.6 percent higher at 27,940 points. The technology-heavy Nasdaq advanced 2.7 percent to 11,141 points. The broad S&P 500 gained around two percent to 3398 points. Given the coronavirus pandemic, pharmaceutical companies were once again in the spotlight. Advances in the development of a drug and a vaccine against Covid-19 helped Ampio and Ibio to make course jumps of around six percent each.
The papers of the Pfizer-Group and its German development partner Biontech advanced up to 4.1 percent. The EU wants to secure up to 300 million doses of the potential corona vaccine developed by these two companies.
The titles of Modern and Vaxart, which were up to 4.6 percent more expensive. According to stockbrokers, they benefited from a setback by their rivals Astra Zeneca. The pharmaceutical company stopped testing a promising corona vaccine because of the disease of a study participant. The shares of Astra Zeneca listed in the USA fell a good two percent.
2 – trade in Asia
Asian equity markets ended their longest losing streak since February on Thursday, following the rally on Wall Street. Japan’s technology and semiconductor stocks took their lead from US competitors and gained: Die Softbank Group achieved profits of around 2.8 percent, Internet service provider Rakuten was able to record an increase of 7.5 percent.
“However, with some volatility returning to the markets, it is too early to say whether the sell-off is over or if last night’s recovery is just a pause,” said ANZ Bank economists Brian Martin and Liz Kendall .
The Nikkei index, which comprises 225 values, was 0.5 percent higher at 23,152 points. The broader Topix index rose 0.9 percent and stood at 1620 points.
The Shanghai stock exchange was 0.3 percent up. The index of the most important companies in Shanghai and Shenzen gained 0.8 percent. The MSCI index for Asian stocks outside of Japan fell 0.7 percent.
3 – ECB decides on how to proceed in the corona crisis
The Council of the ECB is discussing the further course of monetary policy on Thursday. The most important instrument of the ECB in the current situation is its bond purchases. It was only in June that it increased its crisis program in the corona pandemic, called PEPP, by 600 billion euros to 1.35 trillion euros.
The main goal of the ECB is a balanced price level with a medium-term inflation rate of just under 2.0 percent. In the corona crisis, the trend towards weak inflation rates intensified. In August, consumer prices in the euro zone fell for the first time since 2016. According to an initial estimate by the Eurostat statistics office, the inflation rate fell to minus 0.2 percent. In July, the rate was plus 0.4 percent.
Falling consumer prices are a potential risk to the economy. They can trigger a downward spiral as consumers and businesses speculate on further falling prices and push investments further and further back.
4 – Mediterranean Summit in Corsica
Against the background of dangerous tensions in the eastern Mediterranean, heads of state and government from seven southern EU countries will meet on the French island of Corsica on Thursday afternoon. As the host of the informal summit in Ajaccio, France’s head of state Emmanuel Macron wants to advise on the controversial search for natural gas in the eastern Mediterranean, the situation in civil war-torn Libya and migration in the Mediterranean region.
France, Greece, Cyprus, Malta, Italy, Spain and Portugal want to vote before the EU special summit on Turkey on September 24th. Greece and Cyprus believe that Turkey’s gas exploration is taking place in their sea areas and is therefore illegal. NATO member Turkey rejects the allegations. Turkey takes the position that the waters in which it searches for natural gas belong to its continental shelf.
France recently increased its military presence in the eastern Mediterranean as a sign of solidarity with Athens and Nicosia. Greece is currently also facing the consequences of the major fire in the Moria refugee camp on the island of Lesbos.
5 – London and Brussels vie for trade pact agreement
The chief negotiators of the European Union and the UK will meet in London on Thursday for the final day of their trade pact negotiations. The three-day round of talks between Michel Barnier and David Frost is overshadowed by severe criticism of the recent plans of British Prime Minister Boris Johnson.
It is already the eighth round of talks on a trade agreement for the period after the Brexit transition phase – little progress had been made in the previous seven. At the turn of the year, if there is no agreement, there is a risk of a hard break with tariffs and other trade barriers.
The main disputes are the rules for fishing, but also the extent to which Great Britain will be able to support domestic companies in the future. The chances of success of an agreement are likely to have become even lower due to Johnson’s new plans: He surprisingly announced this week that he wanted to make changes to the current exit agreement.
A corresponding draft law was introduced into parliament on Wednesday. Northern Ireland Minister Brandon Lewis had previously confirmed to the perplexed MPs in the House of Commons that the law would not only nullify part of the Brexit agreement, but would even violate international law. The project met with sharp criticism internationally, but also within its own ranks.
6 – Evolution of the number of bankruptcies
The Federal Statistical Office presents data on the number of bankruptcies in the first half of this year. In Germany, the number of insolvency proceedings in May, with a good 7,500 cases, increased again significantly compared to April.
However, the values calculated by the Federal Office for the first half of 2020 could still be below the comparative value of the previous year due to the state corona aid. There is a tendency towards so-called “zombie” companies, ie those companies that would have had to file for bankruptcy without the state measures.
The corona crisis is likely to lead to more company bankruptcies in numerous countries than the Great Recession following the global financial crisis 13 years ago. This is also evident from the latest forecast from the world’s second largest credit insurer, Atradius. With France, Switzerland, Belgium, Spain, Portugal and Norway, there are also several large foreign trade partners of Germany among the economies that could see record bankruptcies in 2020 and 2021.
7 – Tax estimators publish forecast for 2021
The federal, state and local governments have to get by with significantly less tax money due to the corona pandemic. How big the losses will be this year and next, the tax estimators predict on Thursday. The working group has an extraordinary meeting due to the pandemic. The tax estimate is an important basis for the federal budget 2021, which Finance Minister Olaf Scholz (SPD) intends to present to the cabinet on September 23.
Dates company on September 10th
- 7:00 a.m., Germany: Knorr-Bremse, Q2 figures (detailed)
- 4:00 p.m., Germany: Announcement date in the years of legal dispute between Daimler and the supplier Prevent
- Luxembourg: Corestate Capital, Capital Markets Day
Dates economy on September 10th
- 8:45 a.m., France: industrial production 07/20
- 11:00 a.m., Greece: Unemployment rate 06/20
- 11:00 a.m., Greece: consumer prices 08/20
- 12:00 p.m., Poland: consumer prices 08/20 (final)
- 2:30 p.m., USA: Initial jobless claims (week)
- 2:30 p.m., USA: producer prices 08/20
- 5:00 p.m., USA: EIA Oil Report (week)
With agency material.