The world's third largest exchange had to stop trading for a whole day due to hardware breakdown. This means that one of the world's major indexes, the Nikkei 225 was not quoted. This was the first such serious failure in several decades.
The Japan Exchange Group stated that the problem occurred due to the unsuccessful switchover to backup and emergency stock exchange systems after a hardware breakdown. This was therefore the worst glitch since the Japanese exchange switched to full electronic trading in 1999. The latest announcement from the exchange indicates that the system is to be restarted so that trading can take place in a normal way tomorrow. The lack of trade in Japan is another case after the New Zealand Stock Exchange, where trade was also interrupted, but due to hacker attacks.
Meanwhile, on the stock exchanges where trade takes place, we may see an improvement in sentiment with an opportunity to agree on a fiscal package for the US economy. The increases seemed to be taking place both yesterday in the US, today in Asia, and this morning in Europe after US Treasury Secretary Steven Mnuchin said on Wednesday that negotiations on the new aid package with House speaker Nancy Pelosi had made progress, and both sides said they would continue talks towards a bilateral agreement. Mnuchin was to offer Pelosi a $1.62 trillion package, even less than the original $2.4 trillion, and then $2.2 trillion.
In turn, the US dollar seems to be losing on the currency market, and according to BNY Mellon, it is the most overvalued currency in the world among the 10 major currencies. According to BNY and their model, the U.S. dollar should be about 6.5 percent weaker. All other currencies, based on trade-weighted indices, have a chance to gain between 5 and 7 percent and will continue to be reasonably priced, BNY Mellon analysts believe. For the EUR/USD exchange rate it could mean an increase in the direction of 1.22 USD.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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