Thursday December 24th 2020
Mostly shortened trade
Christmas trade feasts on Brexit hopes
At most trading venues, the positive signs dominate. In an often shortened trade, the vaccine hopes and the confidence in the Brexit issue ensure purchases.
In a quiet pre-Christmas business, the cautiously friendly omens dominate on Christmas Eve on the European stock exchanges. Some of the stock exchanges have closed completely, the open markets – including France, Great Britain and Spain – only trade until around noon. The Stoxx 50 index moves up 0.2 percent to 3080 points.
The main topic is the ongoing Brexit negotiations between Great Britain and the EU. A breakthrough had been reported the night before. In addition, the markets benefit from the expectation that with the vaccination campaigns against Covid-19 starting in many places, the pandemic could lose its horror.
With the news, the British pound and the stock market in London are on the upswing. The FTSE-100 gains 0.4 percent, the pound rises against the euro by a further 0.3 percent to 1.1117, after having advanced the day before. If an agreement is reached, it will not only result in a pound rally, but also lead to broad gains in currencies that are sought after in a risk-friendly environment, says currency strategist Kathy Lien of BK Asset Management. In France it is increasing CAC-40 by 0.3 percent, in Spain the wins Ibex-35 also 0.3 percent.
As in Asia, bank stocks are stronger and lead the sectors in Europe with a plus of 1.2 percent. You benefit from the relief about a possible Brexit deal and the rising yields on the bond markets. The second strongest sector are travel and leisure values that feed on the hope of containing the corona pandemic.
In Asia, the stock exchanges recorded mostly smaller gains. Because of Christmas Eve, there was also only a shortened trade in Japan, Hong Kong and Australia. In Shanghai the market lost 0.5 percent against the regional trend. The focus here was on the Alibaba Group, whose shares in Hong Kong fell by around eight percent. The online giant has come under massive pressure from local authorities. China's market regulator opened an investigation into possible "monopoly practices" by the group. According to the Chinese state media, the authority also wants to hold talks with Ant, Alibaba's financial service provider, as part of its supervisory tasks.
The group announced that it would "actively cooperate" in the investigation. The background to the action against Alibaba and Ant are evidently the efforts of the communist leadership to curb the strongly increased market power of private Chinese tech companies. Alibaba founder Jack Ma sharply criticized China's state financial system in October. He called it obsolete and compared it to traditional Chinese pawn shops.
Incidentally, the positive impulses dominated – also through the hope that with the vaccinations against Covid-19 that had started, the pandemic should lose its horror and in view of the Brexit negotiations. The $ 900 billion package recently agreed in the USA to support the economy also provided another boost.
I'm already closed Japanese market it went up by 0.5 percent. Hopes for further government stimulus measures and the global vaccination measures against Covid-19 drove stocks from the automotive and banking sectors upwards. Financials benefited from higher US Treasury yields after confidence over Brexit negotiations led to sales of US Treasuries.
In financials, Sumitomo Mitsui Trust Holdings and Nomura Holdings won, while Nissan Motor and Honda Motor rose in auto. The Softbank share lost in the course of the investigation against Alibaba. The technology investor is the largest owner of the Chinese online giant.
The stock exchanges of the region in South Korea, where it went up 1.7 percent to a record high despite the quiet Christmas business, supported primarily by firm technology stocks. The country has signed new supply agreements with Covid vaccine makers Johnson & Johnson and Pfizer. Index heavyweight Samsung Electronics shot up a good five percent. The US regulatory authority FCC has made positive statements about the new flagship Galaxy S21 Ultra. If business is also thin in Hong Kong the HSI went up 0.2 percent despite the weak Alibaba share.
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