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Exchange Rates 22.05.2020 analysis

The European stock market began with a negative on Friday. Major stock indexes show a reduction in their positions against the backdrop of an escalation of tension between the US and China. This new tension was due to the intention of the Chinese authorities to ratify the bill on ensuring the national security of Hong Kong.

The Stoxx Europe 600 largest enterprises index began to decline in the morning, and so far its decline has reached 1.46%, which brought it to the level of 335.29 points.

The UK FTSE 100 index fell by 1.71%, German DAX by 1.14%, and France's CAC Index by 1.08%. Indices from Italy and Spain lost the least so far, the FTSE MIB fell by -0.63% while the IBEX 35 fell by -0.60%.

As for corporate news, the most serious drop was recorded in the banking sector. HSBC Holdings fell by 5.1%, Standard Chartered fell 4.4%, and Prudential immediately dropped 7.9%.

Lloyds Banking Group recorded a decline of 1.2% after an unexpected problem with the payment of planned bonuses to management.

Securities of Deutsche Lufthansa AG, on the contrary, showed growth by 1.6%. This is due to the news about the possible transfer of a 25% stake plus 1 share in the hands of WSF in exchange for financial assistance totaling approximately 9 billion euros.

Market participants were impressed by what was happening in China. Today it became known that the government is considering a bill that should ban separatist activities, support the fight against terrorism, and also eliminate external influence.

The US government responded to this immediately by putting forward a document with the expansion of sanctions against China. Among other things, the moment was very exciting that many Chinese companies in the near future can leave the American stock exchanges due to a ban by the US authorities. Thus, China will lose the opportunity to attract investors from America, which in itself is a serious threat to the economy.

In addition, statistics were released this morning that reflected the fall in the UK consumer confidence index this month. To date, it has taken the lowest mark in the last ten years. This becomes evidence that the removal of quarantine measures related to the COVID-19 pandemic could not protect consumers from pessimism in the market. AT present, the index has declined to 34 points compared with data two days ago with a decline of 33 points.

Stock indices in the Asia-Pacific region also remain in the red zone which is mainly also due to the conflict between the USA and China.

The Hong Kong stock market showed the most significant reduction. This is not surprising since the news about the national security law excited investors.

Japan's Nikkei 225 index fell by 0.9%, while the Topix index fell by 1%.

The corporate sector recorded multidirectional dynamics. Securities of SoftBank Group Corp. increase in value by 3% which are followed by shares of Advantest Corp., with an increase of 1.2%. The largest electronics manufacturer Sony, by contrast, lost 0.4%.

China's Shanghai Composite Index shows a decline of 1.9%, while the Hong Kong index is rapidly collapsing by 5.4%.

The South Korean Kospi Index is also negative which lost 1.7%. The same trend can be seen in the corporate market Samsung Electronics Co. which fell by 2.6%, the largest car manufacturer Hyundai Motor also fell by 3.1%.

Australia's S & P / ASX 200 Index is down by 1%. At the same time, shares of the largest mining companies BHP and Rio Tinto are getting cheaper by 0.9% and 2.4%, respectively.

The black bar also lays on the US stock market, which reflects a general downward trend. Here, too, the conflict of interests between China and the United States was taken seriously. However, the indices were suspended for some time, not knowing which side to choose. Nevertheless, after some hesitation, they slowly began to go into the red zone.

Here investors were inspired by the news about the opening of the economies of individual states after quarantine measures. However, this optimism was very uncertain against the background of low economic indicators.

The Dow Jones Industrial Average index closed yesterday at around 24,474.12 points, which reflected a decline of 0.41%, or 101.78 points, respectively.

The S&P 500 index also fell by 0.78% which is equivalent to 23.10 points. Presently, its level is 2,948.51 points.

The Nasdaq Composite Index fell too by 0.97%, or 90.90 points, which drove it to a level of 9,284.88 points.

Despite this trend, there are those who have succeeded a little in bidding. For example, the S&P 500 index, which showed a positive trend of 3%, may finish the week in positive territory. In addition, the Dow index also rose by 3.3%, which allowed it to become the leader in maximum weekly growth.

So far, there has been no news that could seriously support the stock markets in Europe, Asia, and America.

Performed by Maria Shablon,
Analytical expert
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