18.02.2020 – Daily Report. When Apple talks, the stockbrokers listen. Suddenly and unexpectedly the economic damage of the Corona virus comes to the fore. Scepticism is also growing in Germany. The DAX falls back.
Losses on the Frankfurt Stock Exchange
A small shock of reality for investors on the Frankfurt stock market: The DAX lost 0.5 percent to 13,714 jobs at midday. Yesterday, the leading German index had reached a historic high of 13,795 points. Futures on the S&P 500 and Dow Jones recently fell by 0.7 percent.
The reason for this was that the high-tech company Apple revised its sales forecast for the current quarter, which was only a few weeks old. There are supply bottlenecks for iPhones because production in China is being ramped up more slowly than planned. In addition, the demand for smartphones in China is stagnating because of Covid-19.
Pessimism in the German economy
Meanwhile, Corona is also increasingly eroding the confidence of German business. The ZEW index for expectations for the next six months fell surprisingly sharply by 18 points to the plus 8.7 mark in February. This is the first decline after three consecutive rises. The Mannheim-based institute commented that especially the export-oriented sectors were sceptical.
Asia steps on the brakes
Asian stock markets also fell back after Apple’s warning yesterday. The leading index Nikkei in Tokyo lost 1.4 percent to 23,194 points. And in China the CSI-300 crumbled by 0.5 percent to 4,058 points. Meanwhile, speculation is mounting that China will postpone the start of the National People’s Congress from 24 February to 5 March because of Corona.
No impulses from New York
Wall Street is only today again intervening in the events. The US stock exchanges remained closed yesterday because of “Presidents’ Day”.
Consumption of the Turkish Lira
Let’s take a look at the currency market: the Turkish lira has just slid to its lowest level since May 2019 at the time of the greenback. At 6.0725 lira, one dollar cost 0.5 percent more than the previous day. EURTRY rose to 6.5712. Analysts expect the Turkish central bank to lower interest rates further.
Under the current “Erdoganomics” Ankara is trying to strengthen the currency by lowering the key interest rate. Which turns the prevailing doctrine in economics upside down – according to this, a currency becomes firmer when interest rates rise.
Investors are also worried about the simmering conflict in the northern Syrian province of Idlib, which borders on Turkey. A war costs money that the state could obtain via the printing press. Moreover, many investors think twice before investing money in the autocracy: The public prosecutor’s office issued almost 700 arrest warrants against followers of the preacher Fetullah Gülen.
What the day brings
The calendar of events on Tuesday brings only a few interesting events, you can find the overview as always here: Market Mover
For example, the Empire State Index for February starts at 2:30pm in the USA.
And at 4:00pm the NAHB index, also for February, follows.
The Bernstein-Bank wishes successful trades!
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