12.02.2020 – Daily Report. Stoically and calmly the bulls run to new records. The DAX marks an all-time high for the second day in a row. The MDAX is also booming. Wall Street also reports new highs. Oil is on the rise again. Because China is spreading optimism about the corona virus. And then there is the Fed.
New record for DAX and MDAX
Another new record on the Frankfurt Stock Exchange: In early trading, the German leading index topped the peak marked the day before. In the high, the price indicator climbed to 13,724 points. Most recently, the DAX was up 0.6 percent to 13,703 points.
The MDAX also boomed and climbed above the 29,200 mark for the first time, reaching 29,287 points. Most recently, the index of mid-sized shares was up 0.2 percent to 29,254 points. US futures rose by a good 0.3 percent.
The reason for all this: Beijing now expects the peak in new corona infections to be reached before the end of the month. Apparently, the number of recoveries climbed faster than the number of deaths.
Gains on the Asian equity market
Consequently, the brokers in Asia also took up the opportunity. The Chinese CSI-300 rose by 0.8 percent to 3,984 points. And the Japanese leading index Nikkei rose 0.7 percent to 23,861 points.
Warning of the energy shock
In the case of crude oil, the buyers were again on the scene: WTI rose by 1.5 percent to 50.70 dollars, Brent climbed by 2 percent to 55.10 dollars.
Meanwhile, the rating agency Fitch pointed to a little-noticed, but perhaps trend-setting niche for the stock markets: According to this, the market for Liquefied Natural Gas (LNG) could slide into a big hole because of China. Spot prices and freight rates have already fallen, which indicates that world trade will suffer a severe setback in the first quarter. And LNG importers in China have already announced that they will probably have to cut LNG imports by 70 percent in February. Fitch noted that Chinese LNG imports accounted for about 17 percent of the world market in 2018 and were responsible for 50 percent of the total growth in demand between 2016 and 2018.
Record hunt in New York continues
Nevertheless, many brokers were apparently afraid of missing the rally recently. And when prices rose, they took the profits with them for safety’s sake. Thus, the Dow Jones climbed to a new high yesterday of 29,415 points. But at the closing bell, the leading index went out of trading at 29,276 points. The high-tech indices and the S&P 500 even posted new closing records. The S&P climbed 0.2 percent to 3,358 points. The Nasdaq 100 squeezed out a minimal gain of 0.01 percent to around 9,518 points.
The broker Gorilla Trades pointed out an interesting fact on the blog “ValueWalk”: While small caps have been lagging behind in recent weeks, the Russell 2000 now confirmed the bull market. However, the index still has a lot of catching up to do. The Russell 2000 closed yesterday with a plus of 0.6 percent at 1,678 points.
The Fed is ready
Meanwhile, US Federal Reserve Chairman Jerome Powell made it clear in front of the House of Representatives that the Federal Reserve would stick to its loose monetary policy. The epidemic in China is a new factor of uncertainty. At the same time, he painted a rosy picture of the US economy: it had recently grown moderately by a good 2 percent and the unemployment rate was at its lowest level for decades. For investors, this is a Goldilocks situation: Goldilocks can look forward to a booming economy and cheap money on the stock market at the same time.
Bye, bye Dems
On top of this comes US politics. So now the self-declared socialist Bernie Sanders has won the Democratic primary in New Hampshire. This increases Donald Trump’s chances. And Wall Street looks forward with satisfaction – bull market. Gallup has just published a survey of 1,033 voters, and above the 1,000 mark such a mood is considered representative. According to the survey, only 45 percent of the eligible voters said they would vote for a socialist; 53 percent voted against. The distribution within the electorate is interesting: Of the Democrats, 76 percent would vote for a Red; of the Independents only 46 percent. And of the die-hard Republicans, only 17 percent.
What the day brings
Wednesday has only a few important dates, as always you can find an overview here: Market Mover
Fed Chairman Powell will first address the Senate Banking Committee at 4 p.m.
Shortly thereafter, at 4.30 pm, the Energy Department’s oil report will arrive.
The Bernstein-Bank wishes successful trades!
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