17.10.2019 – Daily Report. Wait and see is the motto on the German stock market and in global trading. It’s quiet on the news front: nothing new in the China-USA customs dispute; unspectacular results in the current US reporting season; faltering negotiations on Brexit. The financial markets, however, should not remain in standby mode for long in view of the US economic data in the afternoon.
Hardly any movement in Frankfurt
The lake is still resting: Most investors on the Frankfurt trading floor have waited sideways. The DAX recently held its own at 12,711 points, 0.3 per cent firmer at a low volume. This also marked a new high for the year. Brokers referred to the new US economic data due this afternoon and above all to the Brexit.
Agony or breakthrough for Brexit
The British pound was once again the focus of traders’ attention. The heads of state and government of the EU are today discussing Britain’s planned withdrawal from the EU. According to media reports, both sides have come much closer. But there was no comprehensive agreement recently – if you read these lines, you may already know more. Most recently, leaders of the Northern Ireland Democratic Unionist Party had resisted the concessions on tariffs. The DUP plays a key role in the underworld as Prime Minister Boris Johnson needs his ten votes. When trading CFDs, keep an eye on the regular market updates and free real-time prices on Cable.
Asia is also waiting
Investors in Asia also did not really dare to take out cover. In China, the CSI-300 closed 0.1 percent lower at 3,920 points. The Japanese Nikkei-225 also dropped by 0.1 percent to 22,452 points.
The old suffering with ChinaDithering in New York
Wall Street had also put on the handbrake the night before. The leading Dow Jones index recorded a slight loss of 0.1 percent to 27,001 points at the closing bell. The S&P 500 crumbled by 0.2 percent to 2,989 points. And the Nasdaq Composite fell 0.3 percent to 8,124 points. Brokers immediately reinterpreted the surprising drop in US retail sales as an argument for a Federal Reserve rate cut.
Zero interest rate curse
Meanwhile, the International Monetary Fund has warned of risks on the financial market. Investors are therefore taking ever greater risks in their search for returns. The IMF judged that financial service providers outside the banking sector are particularly at risk. A loose monetary policy supports the economy in the short term, according to the presentation of its new Financial Stability Report. Due to low interest rates, institutional investors such as funds, pension funds or insurers are taking on ever higher risks.
In other words, the next crash is bound to happen because investors are looking for returns on seemingly safe assets. At this point, we had already referred to the booming US market for securitized corporate loans – collateralized loan obligations. For traders, this means the following: If you read news about disbursement problems with US pension funds or suddenly overturning major banks and insurers, then the stock market could go round very quickly.
This is what the day brings
It remains to be hoped that the incoming economic data in the afternoon will give Wall Street, DAX and co. new impetus.
At 2.30 p.m., the US construction starts and approvals for September will be received.
It will be really exciting at the same time as the weekly applications for unemployment benefits are made.
At the same time, the Philly Fed index for October is announced.
Shortly thereafter, US industrial production data will arrive at 15:15 in September.
At 16.00 the oil report of the Department of Energy follows.
The annual meeting of the International Monetary Fund (IMF) and the World Bank will also take place in Washington.
You can find our schedule here: Market Mover
The Bernstein Bank wishes you successful trades!
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