Forex Analysis & Reviews: 07.09.2020 - Stocks in Europe rally as...

07.09.2020 01:49 PM

Stocks in Europe rally as Asia and America grapple with problems

The main stock indicators of the US stock exchanges traded in a negative zone on Friday following the fall which occurred the day before. Market participants have not yet moved on from the news about the decline in the value of securities of companies in the technology sector.

The Dow Jones Industrial Average fell 0.56% or 159.42 points. Its current level is 28,133.31 points.

The S&P 500 Index sank 0.81% or 28.1 points, which forced it to move to the level of 3,426.96 points.

The Nasdaq Composite index fell 1.27% or 144.97 points, which sent it to the 11,313.13 points.

Note that in the previous trading, a significant drop in indicators was also observed. The Nasdaq parted with 4.96%, the Dow Jones fell 2.78%, and the S&P 500 fell 3.51%.

Nevertheless, some analysts do not see much of a problem in such a significant decline in the US stock indices. They stressed that a correction after a rapid and long-term rise is necessary. Market participants rushed to fix their profits until statistics and news on the US economy force the indicators to decline.

In general, over the last month of the summer, the S&P 500 was able to demonstrate a record high growth, which has not happened in almost thirty-four years. It rose 7% for the month of August and already gained 2.3% in the first couple of days of September. So literally just before the fall, it took its maximum values.

Market participants' attention shifted from the tech sector, where they tried to lock in profits, to the energy, finance, and raw materials sectors.

Friday's trading on stock exchanges began with growth due to the positive news from the US labor market. According to the US Department of Labor, the unemployment rate in the country immediately fell to 8.4% for the month of August, while the previous figure was at around 10.2%. In addition, the number of new applications for unemployment benefits decreased by 130,000, and the total number of applications is now consolidated within 881,000. This was the lowest level in the history of the coronavirus pandemic.

Thus, fundamental indicators do not pose any danger to the market. Instead, they act as a catalyst for growth. The current correction, according to experts, will end rather quickly, and the indicators will again go up to new record values.

According to the revised forecast from the analytical company BofA Securities, the S&P 500 index may well reach the level of 3,250 points and gain a foothold there by the end of 2020. The initial estimated growth amounts to no more than 2,900 points. This figure is only 5.9% below the level that was recorded by the indicator at the end of the trading session on Thursday.

Meanwhile, almost no significant dynamics were noted on the Asian stock exchanges. Market participants froze in suspense, watching what was happening on the US stock markets. In addition, traders are trying to assess Chinese foreign trade statistics for the last month of the summer.

Japan's Nikkei 225 Index fell 0.38% Monday morning.

China's Shanghai Composite Index fell 0.35%. The Hong Kong Hang Seng Index followed this trend and fell 0.18%. The total volume of China's exports over the last month of the summer has exceeded experts' expectations. The reasons for such positive dynamics were the growth of demand on a global scale, as well as the gradual lifting of quarantine measures in most countries of the world.

The export level rose by 9.5% over the same period last year. This is the third in a row and the most noticeable increase over the past six months. It is also higher than analysts' initial forecast with an estimated growth of no more than 7.1%.

South Korea's Kospi index climbed 0.67%.

The Australian index S & P / ASX 200 moved multidirectional but so far marked a meager increase of 0.01%.

The European stock markets, on the other hand, traded in a positive zone Monday morning. The main stock indicators are growing, following a notable decline in Friday's trading.

Market participants were particularly concerned about the new stage in the negotiation process between the UK and the EU on Brexit. According to the British authorities, the trade agreement should be signed by mid-October, otherwise this deal may not take place at all.

Another reason for concern is the ECB's decisions on the financial policy which will be known at the meeting which is scheduled for next Thursday.

The Stoxx Europe 600 Index of Large Enterprises in the European Region went up by 1.03% which pushed it to 365.67 points.

The UK FTSE 100 Index is up 1.23%. The German DAX Index gained 1.3%. France's CAC 40 jumped 1.09%. Italy's FTSE MIB Index rose 0.94%. Spain's IBEX 35 Index went up 0.52%.

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