28.10.2019 – Daily Report. The bulls on the Frankfurt stock market are not giving up: Supported by the record hunt on Wall Street, the DAX lurks just under 13,000 points at the start of the week. Once again, hopes of a tariff deal between China and the USA are supported. But the story of the day comes from Bitcoin.
Summit run in Frankfurt
The DAX wants to continue its upward trend: In early trading, Germany’s leading index reached a new annual high of 12,944 points. This had already been the case on Friday at 12,914 points when prices rose after a slow start. However, activity on the trading platform was still manageable at first. Most recently, the DAX gained 0.3 percent to 12,933 points.
Good mood among exporters
German exporters were in a buying mood on Monday. Their mood brightened significantly in October: The index for export expectations rose from minus 5.3 points in September to minus 1.2 points, according to the Munich Ifo Institute. A total of 2300 companies were surveyed. As always, you can find all the data here:Market Mover
Chinese monster move at Bitcoin
Bitcoin caused a sensation: The crypto currency recently crumbled slightly under profit taking and was quoted at 8,468 Euro. It had reached an interim high of 8,897 euros late on Friday – after having been at a low of 6,627 points on Thursday.
And that had happened: Shortly after the opening of Wall Street, the free real-time prices shot up on Friday. In the high, Bitcoin recorded a plus of 40 percent within 24 hours. The market reacted to a message from the Chinese news agency Xinhuanet: President Xi Jinping urged that all the advantages offered by blockchain technology be exploited. This is what happened Friday local time in front of the Politburo of the Communist Party. The Crypto community of course immediately spread the word via Twitter. Interestingly, according to “USA Today”, there has been a crypto ban in China since autumn 2017. Beijing also wants to ban crypto mining in the country. At the same time, however, the Chinese central bank wants to offer its own digital coin, which is swept along the yuan, according to the newspaper. So China is apparently becoming a controlled crypto country.
Always new customs hope
Meanwhile, USDCNY has remained broadly unchanged at 7.0063 lately. This could change soon. Speculation in the media that the US and China are on the verge of concluding a tariff deal was mounting, at least for Phase 1. Edward Laurence of Fox News twittered that he had heard of a positive telephone conversation between negotiators Robert Lighthizer and Steven Mnuchin and Vice Premier Liu He. According to the report, both teams are on the verge of finalising important components. And ZeroHedge reported that Peter Navarro, White House consultant, had indicated that a deal would be signed in November. In addition, US Vice President Mike Pence stressed that America did not want to exclude Beijing from the global economic system. He also accused Beijing of large-scale theft of trade secrets and other unfair trade practices.
Profits in Asia
Nevertheless, the Asian stock market took action. The CSI-300 with the most important Chinese stocks gained 0.8 percent to 3,927 points in the morning. And the Nikkei index climbed to a twelve-month high of 22,896 points. In the end, Japan’s leading index closed up 0.3 percent at 22,867 points. This was the sixth consecutive positive trading day.
Record hunting in New York
The Wall Street stock market also stocked up on shares. The Dow Jones had left trading on Friday with a gain of 0.6 percent at 26,958 points. The Nasdaq 100 rose by 0.8 percent to a final record of 8029 points – supported by Intel and Tesla in particular. The S&P 500 levelled out its old high of 3,026 points in the course of the year and closed with a plus of 0.4 percent to 3,022 points.
The end is near
With all the euphoria, that leaves the warning of an expert. The almost legendary investor Marc Faber referred to the “repocalypse” of 24 September, which had just been averted, when the interbank market in the USA froze and the Federal Reserve had to play the lender of last resort. We had reported on the mysterious event in a special report. Faber judged: The date probably heralded the beginning of the end of the “Unicorn bubble” and the trend to put pension funds in the hands of private investment managers – because there are probably liquidity problems with some equity managers. He added: “WeWork was probably only the first Unicorn to tip over before it went public. Unicorn is the name given to companies that are valued at more than 1 billion dollars before their IPO. All in all, Faber expects turbulence in the market. A liquidity crunch would have a negative impact on all asset prices, some more, others less.
This is what the day brings
Forex traders should continue to keep an eye on the pound in their regular market updates. The EU has agreed to extend the Brexit date until 31 January 2020. The question remains whether Prime Minister Boris Johnson can push through new elections in parliament.
The US trade balance is published at 1:30 pm.
And ECB President Mario Draghi is bid farewell from 3pm. Just like his successor Christine Lagarde, he steps up to the lectern – which could move the euro, bonds and shares.
The Bernstein Bank wishes successful trades!
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