Hope and Fear




Business Developer


THE recovery on the European financial markets continued vigorously in the second half of last week. Good corporate balance sheets and low prices beat fears of war and the return of COVID lockdowns.

Apple has significantly exceeded expectations. Apple’s share price initially rose around 2 percent after the trading session. The tech giant posted net income of $25bn and earnings per share of $1.52, which was nine cents better than expected.

On Thursday, the hesitant recovery of the stock markets from Wednesday continued with momentum. The Dax index once again exceeded the 14,000- point mark. At noon, the leading German index was up around 1.8 percent at 14,045 points. The broader European leading index, Euro Stoxx 50, rose by 1.8 percent to 3803 points. The good quarterly figures of many companies convinced investors. In addition, there were cheaper prices after the weak stock market in the first half of the week. The shock of the Russian gas supply halt for Poland and Bulgaria seems to have been digested for the time being.

Futures transactions on the American stock indices pointed to a friendlier end of the week. The Dow Jones index of blue chips was expected to be 0.9 percent higher, with the broader S&P 500 even 1.5 percent higher. American technology stocks also seem to have survived the sell-off of the past few days. Investors expected the Nasdaq 100 technology index to rise by 2 percent.

The euro continued to struggle to break out of its downward movement. The currency briefly fell below $1.05 in the morning. On April 28, one euro cost $1.0533, 0.2 percent less than the day before. Other currencies are also coming under increasing pressure. The British pound fell against the dollar to its lowest level since July 2020. The dollar exchange rate exceeded 130 yen for the first time in 20 years on Thursday. The Japanese central bank had announced that it would stick to its loose monetary policy to continue to support the economy. Their goal remains to keep inflation in Japan stable above 2 percent.

The price of oil stagnated on Thursday. The American crude oil type, WTI (West Texas Intermediate), was priced at $102.19 per barrel, almost no change from the previous day. At $105.54, the North Sea variety, Brent crude, was around 0.4 percent more expensive than on Wednesday. Gold cost 0.15 percent more at EUR 1,794.78 per ounce.

But the fear that this recovery is only short lived is very real.

Meanwhile, in Beijing, queues in front of the supermarkets, empty shelves, overwhelmed delivery services and people in white body suits are everywhere. Scenes are currently playing out in the Chinese capital that were seen in Shanghai in March before the big lockdown. The government wants to prevent a lockdown in China’s capital at all costs. But in Beijing, mass tests are causing panic. The resentment of the people is growing.

The trigger for panic buying in Beijing last Sunday evening was the instruction that all three-and-a-half million residents in the capital’s largest and richest district, Chaoyang, had to be tested for COVID-19 on Monday. The mass tests were repeated three times last week. The Chinese financial markets share this fear. After the central bank cut interest rates on Monday, the yuan fell further on Thursday to its lowest level in 18 months. Since the beginning of the month, the currency has fallen 4 percent - the fastest in 30 years.


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