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Market Report
Status: 29.01.2021 10:29 pm
The battle between David and Goliath is currently raging in the stock markets. A crowd of small investors bet against hedge funds and Wall Street rock. Part of the earnings for January evaporated.
Traders speak of the “player’s war”, others of the “battle of small savers against long-established professional investors.” For days, an army of small investors organized through online services like Reddit has been trying to bring hedge funds to their knees. GameStop Actions are the gamer’s toy. Investors, mostly young, gambled on the US video game retailer’s rising prices and forced hedge funds to liquidate their bets on a fall in the share price. “What happens at GameStop reveals that the stock market has become a battlefield rather than a playground,” warned stock market expert Dirk Müller on n-tv.
GameStop bet continues
Neo-brokers like Robinhood, who are very popular with young small investors, pulled the tightrope and stopped the wild bet around GameStop shares. That in turn sparked a storm of outrage. Robinhood was suspected of discriminating against small investors compared to large Wall Street investors. On Friday, the neo broker relented and eased trade restrictions again. GameStop’s share price soared again. Other stocks were also recorded, where hedge funds are betting heavily on falling prices.
The rebellion of many small investors against powerful hedge funds could pose a serious threat to the financial system. Because if hedge funds can no longer make up their losses and run into difficulties, there is a risk of a major shock to the financial markets.
Small earthquake on Wall Street
The search for hedge funds by amateur investors is fueling uncertainty in the equity markets. There is already talk of a “GameStop earthquake”. The Dow Jones fell about two percent to less than 30,000 points on Friday. With a decline of almost 3.3 percent, it was the worst week in the stock market since October. The broader S&P 500 and the Nasdaq also lost about two percent.
Easy Come Easy Go!
Following the weakness of the US stock markets, the DAX also increased its losses. It closed 1.7 percent lower on Friday at 13,432 points. Therefore, the weekly minus totaled 3.2 percent. The gains from the beginning of the year are already gone. In January, the DAX lost 2.1 percent after temporarily hitting a new high at 14,131 points.
The vaccine disaster
Lack of progress with vaccines and new lockdowns are creating additional uncertainty. “Missing vaccine, virus mutations – the exit from the pandemic is still really bumpy,” said Commerzbank analyst Thu Lan Nguyen. Now there are fears that European states will take over the procurement of vaccines again if the EU fails to coordinate, warned market analyst Milan Cutkovic of brokerage Axi. “This could lead to new tensions within the community and weigh on the European stock exchanges.”
Brussels gives the green light to AstraZeneca vaccines
The dispute between the EU and AstraZeneca continues. Brussels faces the accusation of asking for too little. AstraZeneca needs to explain why the company’s home country, UK, is receiving full doses of vaccine. In the afternoon, the EU gave the green light to the British pharmaceutical giant’s Covid-19 vaccine, but only granted conditional approval.
Setback for Johnson & Johnson vaccine
There was a slight setback for another vaccine candidate: According to one study, Johnson & Johnson’s Covid-19 vaccine shows a global effectiveness of 66 percent. Shares of the US group fell about four percent.
Novavax gives hope
According to preliminary results, a candidate vaccine from the US manufacturer Novavax has shown about 90 percent efficacy against Covid-19. The vaccine is said to work very well against the mutation first discovered in Britain; on the other hand, the effect of the South African variant is said to be less strong.
GB maintains Astrazeneca vaccine and welcomes Novavax development
Thomas Spickhofen, ARD London, Jan 29, 2021 3:29 pm
Escape the dollars and gold
Due to growing nervousness in equity markets, some investors fled to “safe havens” such as the dollar, the world’s reserve currency. The dollar index, which reflects the exchange rate against the major currencies, rose 0.3 percent. Gold is also in demand again: the precious metal was up 1.8 percent to $ 1,872 per troy ounce (31.1 grams).
Elon Musk boosts Bitcoin
And the fluctuations also increased again with Bitcoin. The cryptocurrency rose on the Bitstamp trading platform by around twenty percent over the course of the day to around $ 38,000. More recently it was trading at $ 36,000. Observers blamed a tweet from Tesla boss Elon Musk with the simple hashtag “#Bitcoin.” A few days ago, Musk added a link to an internet investor forum to fuel the stock market hype about Gamestop.
Daimler makes billions in profits
Daimler was one of the few DAX winners. With an unexpected final push, the Stuttgart-based automaker beat its own earnings expectations and analyst forecasts. Earnings before interest and taxes (EBIT) were 6.6 billion euros last year. Analysts only expected the group to top 5.2 billion euros on average, and the automaker itself had promised stable earnings of 4.3 billion in November.
SAP wants to increase dividends
Europe’s largest software company SAP wants to use the US IPO proceeds from its market research subsidiary Qualtrics to mainly reduce its debt. However, CFO Luka Mucic said in a conference call that he would also propose to the supervisory board to increase the dividend.
BMW produces the i4 before
According to a report by “Handelsblatt”, the BMW Group plans to produce the i4 electric car model from August or September at the latest. The original date was the end of 2021. With the earlier start of production, BMW is responding to the growing demand for electric cars in Germany. On the other hand, the company wants to get ahead of its rival Tesla.
Recommended by Sartorius
The US bank JPMorgan has raised the target price for Sartorius from € 390 to € 455 and has left the rating “Overweight”. Analyst Richard Vosser has raised his operating profit estimates for laboratory and pharmaceutical equipment supplier and its subsidiary Sartorius Stedim Biotech to 2025 due to the fourth quarter, current-year outlook and significantly higher medium-term targets.
Rationally degraded
Deutsche Bank lowered Rational’s rating from “Hold” to “Sell”, but raised the price target from 425 to 460 euros. Analyst Lars Vom Cleff wrote in a study that the commercial kitchen supplier should have recorded stable business development on a low basis in the last year. The valuation is already high, justified his new investor vote.
Siltronic with lower sales and profits
Semiconductor supplier Siltronic was hit by lower sales prices for its silicon wafers and the strong euro last year. In 2020, sales fell by around five percent to a good 1.2 billion euros. Earnings before interest, taxes, depreciation and amortization (Ebitda) fell by around 16 percent to 344 million euros.
Decrease in earnings at H&M
The world’s second-largest fashion group, H&M, has felt the second wave of the crown with numerous business closings. Profit in the fourth quarter of 2019/20 from September to November was SEK 3.67 billion (about € 363 million), after SEK 5.4 billion in the same period last year.
Multiplication of profits at LG
Despite sustained losses in the smartphone business, South Korean electronics maker LG was able to significantly increase its profits last year. The surplus reached 2.06 trillion won (the equivalent of 1.5 billion euros). That was more than eleven times more than the year before. LG benefited primarily from strong sales of home appliances and home entertainment products such as televisions.
Dr. Martens goes public
Shares of Dr. Martens made a brilliant debut on the London Stock Exchange on Friday. The British shoemaker’s newspapers closed at 450 pence, almost 22% above the issue price of 370 pence. Dr. Martens, who first launched his cult boots in 1960, sells more than eleven million pairs of shoes in more than 60 countries each year. The company said the shares were eight times oversubscribed. Financial investor Permira had just paid 380 million euros for the company seven years ago.
Coinbase soon as action
The largest US trading platform for cryptocurrencies like Bitcoin, Coinbase, is specifying its plans for an IPO. The San Francisco-based company announced that it will go public through a direct placement. The papers are listed directly on the stock exchange without the support of investment banks and a prior pricing procedure.
