21.02.2020 – Daily Report. What was that? Wall Street had gone to ground drastically in a matter of minutes yesterday. And it had taken the DAX down with it. The index closed the day low. The usual suspects – China and Corona – don’t have much of an explanation. Brokers have a hunch – and the DAX dares to stabilize on Friday.
The DAX catches up
The leading German index proved robust on Friday afternoon: initially the DAX fell back to 13,576 points. However, in the end, it remained only 0.1 percent down at 13,658 points. This was despite the fact that US futures were down a good 0.4 percent. Meanwhile, gold was in demand: the precious metal rose 0.8 percent to 1,635 dollars; it just reached a new record high of just under 1,516 euros.
Ever new corona warnings
In addition to a wave of infection in Chinese prisons, South Korea is now also causing new scepticism about Covid-19, and in fact more and more companies and institutions are warning of the consequences. Maersk, for example, the world’s largest container shipping company, sent out a profit warning about China. The paralyzed Chinese factories would harm the world economy. Goldman Sachs warned that the stock market underestimated the impact of the virus. Morgan Stanley could imagine a factor crash and JPMorgan whispered, “this bubble will collapse.” But Corona alone is not up to the task of yesterday’s surprising setback – it can hardly be that many brokers are all at once turning new worries into trades.
Strange timing of the mini-crash
Some stock exchange traders in the USA referred to the conspicuous timing of yesterday’s small flash-crash: exactly at the close of trading in Europe, prices plummeted before bargain hunters on Wall Street picked up again. Above all, stocks that had recently boomed were sold – stock market stars such as Tesla, Virgin Galactic, Plug Power, Facebook, Apple and Alphabet.
There was immediate speculation that a large European fund or an EU bank urgently needed fresh money. Is there a threat of a major institutional failure on the old continent? We strongly advise: Keep direct market access open and keep an eye on regular market updates. If it goes bang, you also need a powerful broker with a Bafin license.
Reset in the USA
The Dow Jones Industrial closed 0.4 percent lower at 29,220 points on Thursday. Meanwhile, the Dow dropped below 29,000 and the S&P 500 also dropped 0.4 percent to 3,373. And the Nasdaq 100 lost 0.9 percent to 9,627 positions. Strong US economic data receded into the background – the Philly Fed Index was convincing.
Asian stock markets without a clear trend
On Friday, Asian stock markets did not show a clear trend. In the Middle Kingdom, the CSI-300 closed the morning 0.1 percent higher at 4,150 points. In Tokyo, the Nikkei index closed 0.4 percent lighter at 23,386 points.
What the day brings
At the end of the week, the diary only lists a few interesting events. As always, you can find an overview here: Market Mover
For example, the US PMI Manufacturing and Services is scheduled for February at 3:45pm.
And at 4:00pm the figures for second-hand real estate sales will follow.
The Bernstein-Bank wishes successful trades and a relaxing weekend!
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