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Equity markets: Technical breakdown on Euronext

D.he trading on the Euronext multi-country exchange came to a complete standstill on Monday morning. The group announced that the reason was technical problems. Euronext is working on a solution. The trade in Paris, Amsterdam, Brussels and Lisbon is affected, it is about shares and derivatives. Only recently had Euronext prevailed in the bidding dispute over the takeover of the Milan Stock Exchange against the Deutsche Börse and the Swiss Exchange SIX.

But the competitors are not immune to similar problems either. In the past few months, system failures have repeatedly caused a sensation at large stock exchange operators. On October 1, the worst technical failure in decades put trading on the Tokyo Stock Exchange
lame all day. In mid-August, the London Stock Exchange LSE was only able to start trading with a delay of one hour and 40 minutes.

Deutsche Börse got it twice this year. On July 1, a disruption paralyzed share and derivatives trading on the Frankfurt stock exchange, the Leipzig power exchange EEX, the Vienna stock exchange and other European exchanges for three hours. On April 14, the system was down for more than four hours – one of the longest disruptions in the history of the Frankfurt Stock Exchange.

Positive mood on the market

On Monday morning, the stock markets started the new week on a positive note. Above all, positive company news provided a little boost. In the midst of the Corona crisis, investors were also looking for a breath of fresh air for the European economy, the market said. The approaching American presidential election and the continued back and forth over Brexit would have dampened the buying mood.

Later the price gains crumbled somewhat. The German selection index Dax rose in the late morning by 0.3 percent to 12,951 points. In early trading, the German selection index even exceeded the 13,000 mark at times. The Euro Stoxx 50 climbed 0.7 percent to 3268 points.

Investors were evidently encouraged by Chinese economic data, although the economic development there in the third quarter of plus 4.9 percent lagged behind market expectations of 5.2 percent. “China’s economy is nowhere near in top shape,” said portfolio manager Thomas Altmann from QC Partners. But she is recovering solidly. In this respect, the shares of luxury goods manufacturers such as LVMH, Hermes or Richemont, for which China is an important sales market, rose by up to one percent.

Philips and Danone surprise

A number of positive corporate balance sheets were another positive factor. The strong demand from hospitals for ventilators brought Philips a surprisingly large leap in operating profits of 32 percent to 769 million euros. The shares of the medical technology company rose in Amsterdam before the trading range by up to 4.8 percent.

In Paris, Danone’s titles temporarily gained just under 3 percent. The quarterly results were largely in line with expectations, commented analyst Martin Deboo of the investment bank Jefferies. The review of the business areas and internal reforms are steps in the right direction. It is also positive that the supplier of “Evian” water is again formulating business goals.

Against the background of the ongoing discussions about a new US economic stimulus package, however, investors shied away from major exposure to the stock market. The willingness to reach an agreement demonstrated by Democrats and Republicans is nothing but lip service, criticized investment strategist Michael Hewson from brokerage firm CMC Markets. It serves to blame the other for the failure of the negotiations.

At the same time, the fronts in the dispute over future trade relations between Great Britain and the EU have hardened before a new round of negotiations. “But time is running out,” warned Ulrich Stephan, chief investment strategist for private and corporate clients at Deutsche Bank. An agreement must be in place by the beginning of November so that it can come into force in good time and avoid further negative effects on the economy.

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