25.10.2019 – Daily Report. Mixed situation on the Frankfurt stock market. The DAX initially wants to move higher, pushed by a predominantly firm Wall Street and the ECB’s open money floodgates. But GfK and Ifo are stopping the buying mood.
The DAX steps on the brakes
In the first few minutes, the German stock market also made progress on Friday morning. The DAX reached a high of 12,889 points, but recently fell by 0.3 percent to 12,835. On Thursday, the leading German index climbed to 12,914 points – the highest level since June last year.
No change of course at the ECB
Investors first digested the signals from the European Central Bank. Even after Mario Draghi’s farewell, cheap money is likely to continue. The outgoing head made it clear yesterday that the ECB would continue to hold on to its low interest rates for some time to come. EURUSD reacted with slight losses to the 1.1090 level and recently returned to 1.1120.
New economic scepticism
Then, however, the GfK consumer climate stopped the buying mood. According to this, consumer sentiment in Germany fell to its lowest level in around three years in view of the weak economy. And the Ifo index was also mixed: Although it did not fall any further, it remained at the previous month’s level of 94.6 points. However, the assessment of the situation slipped from 98.6 points in the previous month to 97.8 points. On the other hand, the index for business expectations rose from 90.9 to 91.5 points. As always, all data can be found here: Market Mover
New China signal
Meanwhile, US Vice President Mike Pence spread a little optimism about customs deals. He expressed hope yesterday in Washington that a Phase 1 deal would be reached. The US continued to negotiate “in good faith” with China.The Asian stock exchange honoured this: In China, the CSI-300 climbed by 0.7 percent to 3,897 points. The Nikkei closed with a plus of 0.2 percent at around 22,800 points. On a weekly basis, the gain is around 1.4 percent.
Possible new election for Brexit
After slight fluctuations, the British pound recently traded moderately weaker at 1.1545 euros. Further volatility is guaranteed here: Premier Boris Johnson announced that he wanted new elections on 12 December to find his way out of the Brexit impasse. It is questionable whether the House of Commons will agree to this. Should Labour be destroyed at the ballot box in view of the sabotage tactics of recent weeks, the pound should celebrate this – then the Tories will be able to conduct detailed negotiations with the EU on outstanding trade issues with a broad chest. The hope that the EU would clear the way for a new Brexit shift had a supportive effect.
Wall Street predominantly firm
The New York stock market presented a mixed trend the evening before. Stopped by the weak quarterly figures of 3M, the Dow Jones lost 0.1 percent to 26,805 points. After all, the Dow recovered most of its losses. The market-wide S&P 500 rose by 0.2 percent to 3,010 points. And the Nasdaq 100 climbed by 1 percent to 7,967 points.
Economic data was not entirely positive, such as incoming orders for durable goods. The rising mortgage rates are also a cause for concern: the spread to the yield on US Treasuries is at its highest level since 2015. All in all, the US Macro Surprise Index slipped in October to its lowest level since April 2017.
This is what the day brings
Friday doesn’t really bring important dates.
It could be exciting at 4 p.m. when the Uni Michigan consumer confidence is presented.
The Bernstein-Bank wishes successful trades and a pleasant weekend!
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