21.05.2019 – Daily report. A slight counter-movement has set in on the German stock exchange. After the losses of the previous day, the DAX climbed by around three-quarters of a percent on Tuesday. Brokers blamed this on a reprieve for the Chinese telecommunications group Huawei.
Period of grace for Huawei
Small backward role in the trade dispute: Huawei has been on the US government’s blacklist since last Friday. This prohibits US companies from doing business with the network supplier and smartphone manufacturer without government approval. The US authorities suspect Huawei of espionage for Beijing. The case had caused the Nasdaq 100 to slide by 1.7 percent to 7,377 points on Monday. The Dow Jones Industrial lost 0.3 percent lower at 25,680 points and the S&P 500 lost 0.7 percent to 2840 positions.
But now Washington has loosened some of the restrictions. Perhaps out of fear of technical problems, perhaps as a signal in the trade dispute. The company is now allowed to buy US products for 90 days. Huawei is to maintain its existing networks and provide software updates for smartphones, according to the US Department of Commerce.
Breath of relief in China
The most recent development in the morning also gave some confidence to the Asian stock markets. The Chinese CSI 300 climbed by around 1.4 percent to 3,667 positions. However, the Nikkei crumbled by 0.1 percent to 21,272 points. Perhaps traders in Tokyo reacted to an event that has so far received little attention in the mainstream media in Germany: Beijing has just shown the USA and the rest of the world a bad instrument of torture and perhaps, perhaps, persuaded Washington to row back.
Rare earths as instruments of torture
The state news agency Xinhua announced a symbolic visit of Chinese President Xi Jinping to the high-tech company JL MAG Rare-Earth at the weekend. JL MAG Rare-Earth manufactures magnets of all kinds that are used in the automotive sector or in aviation, for example. Interestingly, Xi was accompanied by Vice Prime Minister Liu He, who acts as chief negotiator in the customs dispute with the USA.
As the news agency Bloomberg added, the USA has not yet imposed punitive duties on rare earths from China. Incidentally, around 80 percent of US imports of this raw material come from the People’s Republic. The visit thus appears as a clear warning signal to the USA: if the customs dispute escalates, exports will be stopped. The Chinese trade ministry said on Monday that it would be necessary to wait and see what happens next. CFD traders should keep the possibility of a boycott in mind – and prepare themselves already now with Germany’s best CFD brokers. But please only with providers with a Bafin license.
Smoldering Iran conflict
Meanwhile, Iran has reported that it has quadrupled its production of lightly enriched uranium. The two parastatal news agencies Fars and Tasnim quoted Iranian nuclear agency spokesman Behrouz Kamalvandi as saying that the country would reach the 300 kilogram limit set in the nuclear deal “within weeks”. Meanwhile, US President Donald Trump has once again warned Iran’s leadership against provocation. “Iran would make a big mistake if they did anything,” Trump said yesterday in Washington. But he added: “If they call, we would certainly negotiate.” So on this front there is the threat of further escalation, which is likely to bag up global trade and above all the oil market.
Today’s agenda
Investors should keep an eye on consumer confidence in the Euro-Zone today at 4 pm. At the same time, the figures for the sale of US real estate in April are expected to be ticked off. Finally, the crude oil inventory data of the private American Petroleum Institute (API) is scheduled for 22:30.
The Bernstein Bank wishes you successful trades!
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