Bitcoin and the Stock Market

The third Covid wave is rolling, vaccination is progressing too slowly, and at the same time the world’s most important waterway, the Suez Canal, is blocked. Investors are pulling back. The oil price falls, the Bitcoin plunges, the Dax just barely makes it into positive territory.

The harsh Corona reality has further clouded the mood on the German stock market on Thursday. However, the Dax managed to make up for interim losses of almost 1.3 percent after a nervous trading session. The German benchmark index closed around 0.1 percent higher at 14,621 points thanks to tailwinds from Wall Street. The MDax recovered only slightly, ultimately losing 0.60 percent to 31,321 points.

Bitcoin and StocksOn the European stage, the EuroStoxx 50 closed little changed at 3832 points. New York’s Dow Jones Industrial was moderately up at the close of European trading. Recent statements by U.S. Federal Reserve Chairman Jerome Powell had caused temporary irritation on the market. According to him, very cautiously and with great transparency after an almost complete recovery of the economy, the monetary policy support provided to the markets during the crisis period is to be scaled back.

At 14,804 points, the Dax had reached a record high just a week ago, driven not least by immensely strong car stocks, and thus achieved a gain of almost 8 percent for this year. Since then, Corona worries in particular have put the brakes on. The number of new infections reported to the Robert Koch Institute (RKI) continues to rise. According to the RKI, the infection figures are currently increasing in all age groups, but particularly strongly among children and adolescents. After the abandonment of a nationwide Easter break, meanwhile, the Corona regulations in the individual federal states are drifting further and further apart.

In addition, the important waterway, the Suez Canal, is still blocked by a 400-meter container ship. Efforts to unblock the ship resumed Thursday at high tide. About 10 percent of the world’s trade passes through the Suez Canal. The ship tracker from “Vesselfinder” can be used to follow the salvage attempts live on the Internet.

Bitcoin plunges, oil prices under pressure, dollar and bonds in demand

Fears of falling demand sent the oil price down again. North Sea Brent crude fell four percent to $61.90 a barrel (159 liters). “While we focus on Europe, corona falls are also rising in countries like India and Brazil,” said analyst Vivek Dhar of Commonwealth Bank. These countries are critical to a recovery in global demand, he said.

  • As a result, some investors took to “safe havens” such as Bunds. That pushed the yield on 10-year securities to minus 0.385 percent. Other investors fled into the world’s reserve currency, lifting the dollar index, which reflects the exchange rate to major currencies, to a four-month high of 92.859 points.
  • On the other hand, Bitcoin went down. The oldest and most important cyber currency fell by almost seven percent to 50,391 dollars. Investors partially shifted funds into currencies such as dollars or euros. “A slide below the psychological $50,000 mark could provoke further losses down to $44,000,” said analyst Timo Emden of Emden Research.
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Meanwhile, shares of Adidas – which plummeted by around six percent at the end of the index – fell sharply. A storm of indignation by Chinese Internet users against the U.S. sporting goods manufacturer Nike also caused problems for the German sporting goods manufacturer. Nike had drawn the ire of Chinese social media users with its distancing from labor camps in China. The sporting goods maker wrote on Twitter-like platform Weibo that the company was “concerned” about reports of forced labor in Xinjiang and would not use cotton from the region. Beijing then called to stop foreign merchandise from tarnishing China’s name. After business figures, Aroundtown in the MDax fell similarly sharply. The landlord of office, hotel and commercial properties missed expectations on earnings, analyst Thomas Rothäusler of Jefferies wrote in an initial reaction. Shares in carbon fiber specialist SGL Carbon slumped almost 15 percent after a heavy loss in the past year, bringing up the rear in the small cap index SDax . Hamburg port operator HHLA and solar company SMA Solar presented disappointing outlooks. Their shares slumped by more than 11 and almost 12 percent respectively.

Euro continues to fall

The euro continued its weak trend of recent weeks on Thursday and fell further. In the late afternoon, the common currency cost 1.1786 U.S. dollars, the lowest level since just over four months ago. The (ECB) set the reference rate at 1.1802 (Wednesday: 1.1825) U.S. dollars. The dollar thus cost 0.8473 (0.8456) euros.

For some time now, the euro has been burdened by the appreciating dollar. While it was initially rising growth expectations in the U.S. that drove the dollar, the gloomier market sentiment was added most recently. The dollar is seen as a kind of reserve currency that is targeted in weaker phases of the stock market.

  • For its part, the euro is being weighed down by the sluggish vaccination campaign in large parts of continental Europe. In the USA, Great Britain and even more so in Israel, far more people are currently vaccinated against the Corona virus than in Germany and other euro countries. This is delaying the expected economic recovery, according to the analyst firm Capital Economics.
  • New economic data gave the dollar an additional boost. Not only have so few Americans applied for unemployment benefits for the first time in the past week than in about a year.
  • Also, the U.S. economy in the final quarter of 2020 grew somewhat stronger than previously known. By contrast, the eurozone economy contracted in the same quarter.
  • On other major currencies, the ECB set reference rates for one euro at 0.86068 (0.86250) British pound, 128.75 (128.60) Japanese yen and 1.1045 (1.1068) Swiss franc. The troy ounce of gold was traded at 1731 dollars in London in the afternoon. This was three dollars less than the previous day.