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04.06.2019 – Daily report. Like a magnet, the 200-day line initially attracts the DAX. But then the leading index turns strongly upwards. Nevertheless, after yesterday’s recovery, China continues to weigh on the nerves of investors in Frankfurt. On the anniversary of the Tiananmen massacre, Washington is pillorying Beijing.

DAX resists

The German stock market is on the rise again: the leading index first approached the 200-day moving average once again, which most recently stood at around 11,617 points. In early trading, the DAX dropped to 11,714 points. Most recently, however, it held up 0.8 percent. Yesterday, too, things went well once again: As if the investors in Frankfurt had read our market report, the DAX was exactly on the 200-day line – and then turned up in the schoolbook and closed in the plus.
Brokers blamed new hopes for an interest rate cut in the USA for the DAX shoot in the morning – possibly the US Federal Reserve would have to support the domestic economy. Which brings us to the crucial issue in Frankfurt and global trade – the looming trade war between China and the USA.

Customs dispute continues topic number one

The Chinese CSI 300 fell by 0.9 percent to 3,598 points. In Tokyo, the Nikkei 225 closed the morning unchanged at 20,409 points on the scoreboard.
Goldman Sachs has just publicly changed its mind on the matter: The investment bank now expects an open trade war between the People’s Republic and the USA. In concrete terms: China and the USA are not expected to reach an agreement until the end of 2019, but this will not eliminate all punitive tariffs, but instead reduce the tariffs in return for concessions from China. The analysts see the situation with Mexico in a similar light. Just like most other banks, the Goldmen recently assumed that the US and China would close a deal. And the change of opinion of the masses nicely explains the disappearance of Wall Street.

China’s open wound

What remains is a look at the deterioration in relations between China and the USA. Beijing is suppressing every memory of the 30th anniversary of the Tiananmen massacre – Internet sites are blocked, regime critics disappear. US Secretary of State Mike Pompeo criticised the human rights situation in the People’s Republic: China tolerates “no contradiction” and violates human rights “if this is in its interest”. The Chinese embassy in Washington accused Pompeo of “prejudice and arrogance” and “serious interference in internal affairs”.
The nervous reaction of the Chinese communists points by the way to the sticking point in the customs dispute: After the murder of hundreds, if not thousands, of defenceless demonstrators by the People’s Liberation Army on June 4, 1989, the Middle Kingdom made a silent pact with the people. The state no longer forces people to activism in party and youth organizations and withdraws from private life. The most important thing: except in the strategically important sectors, the market economy prevails – and the state ensures the prosperity of its citizens. In return, the people in the country are completely apolitical and do not criticize the leadership. But what if prosperity wobbles in a trade war with the USA?

High-tech giants suspected of cartels

On Wall Street yesterday, another issue overshadowed the customs dispute: According to insiders, US authorities are investigating the market power of Google and Facebook, as the news agency Bloomberg reported. Which, according to the Bank of America, could lead to a split in the worst case scenario. Investors on the Nasdaq reacted nervously: the composite fell by 1.6 percent to 7,333 points. The Dow Jones index closed almost unchanged at 24,819 points and the S&P 500 fell 0.3 percent to 2,744 points.

This is what the day brings

Both CFD traders and investors in online stock trading should keep an eye on their free real-time prices from 3:55pm today. Then Fed Chairman Jerome Powell will speak. The US Federal Reserve is currently holding its research conference on topics such as monetary policy instruments and communication. So will there be a covert indication of falling interest rates, or not?
Shortly thereafter, at 4 pm, the US industry’s incoming orders will run through the tickers.
The Bernstein Bank wishes you successful trades!

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

03.06.2019 – Daily report. Now it’s getting hot for the bulls: The German lead index has slipped towards the 200-day line. Below this, a deep canyon opens up for the DAX, so the indicator should better close above the moving average. As the Americans say: Do or Die – do it or die. But the signs for buyers are anything but rosy. The temperature in the customs dispute between China and the USA is rising.

Warning signals from chart analysis

At the beginning of the week, the DAX continued to plunge south before recovering. The index slipped in the low to 11,622 points. The indicator thus approached the 200-day line, which most recently stood at around 11,618 points. By the way, the DAX had already broken through the 50-day line last Wednesday. The two moving averages are regarded as important indicators that many investors use as a guide. It’s good that you, dear reader, trade CFDs – because then you can earn good money on the selling side as well, while buy-and-hold investors who own stocks need good nerves.

German blue chips are crumbling

There was plenty of food for the bears: Deutsche Bank slipped below the 6.00 Euro mark for the first time. Brokers blamed this on negative analyst comments on restructuring. The Infineon share continued to fall sharply: Stock market participants criticized the purchase of Cypress Semiconductor as too expensive. ThyssenKrupp’s decline also continued – the stock crumbled to its lowest level in 16 years. After all, the German purchasing managers’ index for the manufacturing sector met most forecasts and calmed the situation somewhat.

New round in customs dispute

However, the decisive topic on the Frankfurt floor was also the threat of a trade war between China and the USA. The leadership in Beijing rhetorically puffed itself up: “China is open to negotiations, but will fight to the end if necessary,” it said in a White Paper published yesterday. It was also said that it was the US that had failed three times since February 2018 to keep its promises. As the latest weapon, Beijing wants to draw up a list of “unreliable” foreign companies. Previously, Beijing had increased punitive tariffs to 5,140 US imports worth 60 billion dollars, including wood, wine and liquefied petroleum gas.
Interesting footnote: While the media in Germany interpreted the action as an expression of China’s intensified will to fight and, of course, predominantly criticised the USA, the Wall Street Journal, which is usually well informed, interpreted the latest speech from the People’s Republic quite differently. Beijing has now struck a new, balanced note and – just like Mexico – signalled its willingness to negotiate towards the USA. We are eagerly awaiting the next steps.

Nervousness in Asia

Meanwhile, the fact that Washington no longer sees India as a developing country and wants to impose punitive tariffs here too in the future caused a flutter of nerves. On Monday morning, the Japanese Nikkei fell to its lowest level for over four months, and the index lost 0.9 percent to 20,411 points. Meanwhile, the Chinese CSI 300 closed almost unchanged at 3,632 points.

Wall Street also looks into the abyss

And Wall Street’s specifications were also anything but rosy for the cops. The Dow Jones went to the closing bell on Friday with a minus of 1.4 percent at 24,815 points. This resulted in a weekly minus of around 3 percent, the largest weekly loss since December. The S&P 500 lost 1.3 percent to 2,752 points on Friday. The Nasdaq 100 fell by 1.6 percent to 7,128 positions.
All major indices on Wall Street thus fell below the 200-day line at the closing level. So the way down is already open here. An unexpected settlement in the Chinese-American customs dispute could, of course, lead to a bear trap. Unexpectedly, the stock market often comes into play – so always keep an eye on your trading platform.

This is what the day brings

This afternoon is going to be really exciting: The Markit Purchasing Managers’ Index for the manufacturing sector from the USA will arrive at 3:45pm in May (2nd release).
At 4:00pm the ISM Manufacturing Index will follow in May. At the same time, US construction spending is ticking across the screen.
The Bernstein Bank wishes you successful trades!

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

31.05.2019 – Daily report. The German stock market is going down again. Investors are concerned about possible Chinese countermeasures in the customs dispute with America. Meanwhile, the US administration has intensified its rhetoric. Investors are waiting for new US economic data in the afternoon.

DAX in the red

The stock market is shaking, at least a little. On Friday morning, all shares in the DAX presented themselves in the loss zone. The index recently slipped by almost 2 percent below the 11,700 mark. Nervousness also prevailed in global trading.

Customs dispute again and again

This was triggered primarily by news that China, in retaliation for the punitive tariffs imposed by the USA, will now raise tariffs on US goods worth 60 billion dollars. In addition, speculations have recently been growing that China wants to cut US industry off from supplies of rare earths. The production of mobile phones and computers would be particularly affected. Just to mention a few things: it was precisely this possible counter-attack that we announced to you at this point as a possible option.
Meanwhile, US Vice President Mike Pence has upgraded his verbal skills. After a meeting with Canadian Prime Minister Justin Trudeau, he told the press that the US could more than double its punitive tariffs if necessary. In addition, Pence is likely to pillory the Chinese leadership with a speech on the 30th anniversary of the Tiananmen massacre, according to CNBC television.
The footnote remains that the USA has now announced 5 percent punitive tariffs to its southern neighbour because of the unchecked influx of people from Mexico. China plus Mexico – Europe-wide, car stocks came under pressure.

China’s industrial engine stutters

In addition, weak economic data from China depressed bull sentiment. The official industrial purchasing managers’ index slipped to 49.4 points in May, from 50.1 points in April. This proves that the tariff conflict with the USA is already paralysing the domestic economy. All important economic data can be found here: Market Mover

However, the hope for stimuli from Beijing supported the courses. In China, the blue chip index CSI 300 lost 0.3 percent to 3,630 points in the morning. The Nikkei in Tokyo, on the other hand, slipped by 1.6 percent to 20,778 points.

Wall Street robust

Wall Street had shown itself to be stable on Thursday. The Dow Jones Industrial closed almost unchanged at 25,128 points. The S&P 500 rose slightly by 0.02 percent to 2784 points, while the Nasdaq 100 gained 0.1 percent to 7224 points. Support was provided by figures on US economic growth, which had accelerated at the beginning of the year. From January to March, the gross domestic product increased by 3.1 per cent over the year as a whole.

This is what the day brings

If you trade CFDs or are involved in online stock trading, you should keep an eye on your trading platform this afternoon.
At 2:30pm, the personal expenses and income for April from the USA will be on the tickers. At 3.45pm German time the Purchasing Managers Index for Chicago follows in May. And at 4 pm the consumer sentiment indicator of the University of Michigan in May (2nd survey).
The Bernstein Bank wishes you successful trades!

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

29.05.2019 – Daily report. All DAX shares in minus: Investors in Frankfurt pressed the sell button on Wednesday afternoon. No wonder, because the Wall Street targets were negative for the bulls. Once again the German stock exchange reacted unsettled to new signals in the threatening trade war between China and the USA. The ECB caused also scepticism.

DAX tests the 200 moving average

The bears swarm out: The DAX fell by more than one percent to 11,860 points. This can have consequences, as the leading index was cheerfully pranced on the 200-day line in recent days. It runs at around 11,908 points. A market close under it would be a signal for the bears.
The European Central Bank caused uncertainty: In their Financial Stability Review, the monetary authorities warned that tensions in world trade and weaker-than-expected economic growth could lead to new sales on the European financial markets.

Stopper in trade dispute

The day before, US President Donald Trump had disillusioned the trade dispute. During his state visit to Japan, he stressed that the USA was not yet ready for a deal with China. The US tariffs on Chinese goods could be increased very quickly and significantly. In addition, there will be no trade agreement between the US and Japan before the Japanese elections. In July, part of the parliament will be re-elected. The Nikkei 225 closed 1.2 percent lower at 21,003 points on Wednesday. The Chinese CSI 300 went 0.2 percent weaker at 3,664 points from trading.

Beijing weakens its own currency

The USA is holding back in view of the Chinese tricks – as already suspected at this point, Beijing is continuing to devalue the yuan. As the “Frankfurter Allgemeine Zeitung” reports, the US Treasury has for the fifth time in a row refrained from pillorying China as a currency manipulator. In the recently presented currency report, the ministry criticized the undervaluation of the Chinese renminbi, which depreciated by 8 percent against the dollar last year. However, China has not been castigated as a currency manipulator. According to the FAZ, this official classification would legally mean that the United States would have to start official negotiations with Beijing on exchange rate policy.

Losses on Wall Street

In the USA, investors fled to the safe haven of government bonds: The yield on ten-year Treasuries slipped to 2.232 percent, its lowest level since September 2017, while the Dow Jones lost 0.9 percent to 25,348 points. The S&P 500 fell by 0.8 percent to 2802 positions and the Nasdaq 100 lost 0.3 percent to 7,278 points on Tuesday. Here, too, a look at the chart technique: the Dow is now hard on the 200-day line, which has already been mentioned several times at this point. De facto, the closing price has already perforated the moving average. We are curious whether the support will hold. The other major US indices are still hovering above it.

These dates are on the agenda

Important economic dates are not on Wednesday’s agenda. CFD traders in the oil market should keep an eye on the American Petroleum Institute (API) crude oil inventory data at 10.30 pm.
Tomorrow, however, it will be exciting in the USA: At 2.30 p.m., the first applications for unemployment benefits will be made via the ticker, ditto the second publication for the gross domestic product of the USA in the first quarter.
At 16.00 o’clock the pending house sales in America follow. And at 5 p.m. the crude oil inventory data are reported to the state Energy Information Administration (EIA).
As always, you will find all dates here: https://bernstein-bank.com/research/#market-mover
We wish you successful trades!

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

27.05.2019 – Special report. Calm reactions in the equity and currency markets after the European elections. What deceptive calm. Long-term investors should certainly think about the euro and German equities. In the Federal Republic a change of policy has become entrenched, which a large part of Europe will probably not take part in. We analyse who loses and who wins.

Policy change ahead

Slight increase in the DAX, hardly any movement in the euro. So apparently everything went well again after the European elections. As was to be expected, commentators in the German press noted the slight increase in the DAX on Monday in the absence of an earthquake in the European elections. A poor explanation: Right-wing parties did not celebrate any landslide victories, but nevertheless made strong gains throughout Europe.
In addition, the media – consciously or unconsciously – overlooked the actual message of the European elections: Germany is turning green, there’s no way around it if things go on like this. For it is not only the election result of the Greens of a good 20 percent that is an important decision, even if the turnout was low compared to the Bundestag elections. But above all the preference of the boys for the Greens is a warning signal for the stock market: According to analyses by german publiv TV channels ARD and ZDF, 29 percent of the 19- to 29-year-olds vote green. Among the even younger, the proportion is likely to be even higher.

The swan song for the DAX and German core industries?

German industry must therefore fear massive disruptions in the future. A turn to the left under the green flag could simply mean the end for many DAX companies, for example in the energy, steel or automotive sectors. This would mean that these sectors in particular and the DAX in general would be short candidates. Who is to finance the deficits of the European debt countries in the future, if this scenario occurs, is in the stars.

German special route

Also because Germany has taken a special path, we must fear for the preservation of the euro. Here in Germany, the climate catastrophe that is supposedly imminent is the big issue. The Greens, on the other hand, are simply not to be found in most other countries. Instead, the preservation of national identity, the well-being of the domestic economy and the expansion of Fortress Europe in countries such as France, Great Britain, Italy, Belgium, the Czech Republic, Slovakia, Poland, Hungary and Austria are the top issues.

Real politic abroad

It is quite possible that these countries will soon say goodbye to the euro because they have had enough of open borders and the permanent zero interest rate of the European Central Bank, which is eating up savings. Long-term investors should therefore take a closer look at government bonds and the stock markets of countries with strong Eurosceptic factions. This is where interesting new national champions could emerge. Indian and Chinese companies will also fill the gap that Germany may or may not leave in the automotive, chemical, weapons production and power plant construction sectors.

Opportunity for alternative high-tech

However, the presumed eco-turn in German industry will probably also produce new champions. You should take a look at the drone industry, for example – if driving bans are imposed, parcels will probably be delivered by air in future. First attempts with air taxis – nothing other than gigantic drones – are also promising. Perhaps the German car industry will achieve a breakthrough in electric propulsion and assume a leading global role. Or at some point the solar industry will be able to store electricity.

Bitcoin attracts strongly

Perhaps the actual message of the European elections in Germany is the reason why investors are currently looking for investments elsewhere than in Europe. On Monday morning, the Bitcoin in Asian trading rose to a twelve-month high. The crypto currency rose to 8,800 dollars, the market capitalisation is now around 260 billion dollars.
Let’s wait and see whether the change of policy in Germany is solidifying, whether the rest of Europe is pulling out and whether our analysis is correct. Be ready.
The Bernstein Bank wishes you every success!

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

27.05.2019 – Daily report. After the alleged choice of fate, the euro reacts calmly, the DAX rises moderately. In short: the market has ticked off the European election. In Asia and the oil market, on the other hand, politics set the pace. Since political stock markets have short legs, however, you must always keep an eye on your regular market updates.

Moderate growth in the DAX

The DAX gained 0.4 percent by noon. Real news was in short supply, and the balance sheet season was also largely over.

US joins forces with Japan

Meanwhile, US President Donald Trump was warmly welcomed to Nippon. Trump spread optimism: “There will not be a comprehensive trade agreement between the USA and Japan in the coming weeks. Many things will wait until after the elections there in July, Trump had tweeted on Sunday. But unlike China, Japan wants to avoid America imposing import duties. The Tokyo leading index closed 0.31 percent higher at 21 182.58 points.

Beijing is stubborn

Beijing, on the other hand, has apparently retreated into a slurry. For the first time, the state news agency Xinhua used the term “core interests” with regard to the state-controlled economy in a commentary on the customs dispute with the USA on Saturday. In other words, issues such as the end of domestic corporate preference are not negotiable. Beijing wants to continue planning and steering. The term “core interests” has so far been used primarily for Taiwan. Nevertheless, the Chinese CSI 300 climbed by 1.2 percent to 3,637 points.

Firmer Wall Street

Because Trump had tried last week to smooth the waves around Huawei. “I can imagine Huawei being involved in some form of trade agreement,” the US president said. For example, the Dow Jones Industrial went into the weekend with a plus of 0.4 percent at 25,586 points. The S&P 500 rose by 0.1 percent to 2,826 points on Friday. The Nasdaq 100, on the other hand, fell by 0.1 percent to 7301 points.

Verbal easing of tensions in Iran

Meanwhile, the situation on the oil market seems to be returning to normal. “We are not striving for a change in leadership, we are striving for the absence of nuclear weapons,” Trump said during his visit to Tokyo. He added that he expected “a deal” with Tehran. Previously, the US president had threatened the mullahs with destruction.
So relaxation everywhere. The week could be quiet, since important appointments on Monday are not pending and many traders are on holiday because of the holiday on Thursday. In addition, the stock exchanges in the USA and Great Britain will remain closed today because of Memorial Day. But especially in a thin market, volatility can strike suddenly.
We wish you every success with your trades!

This is what the day brings

Friday is likely to be an outdated model for stock market traders: Except for the US Order Intake for Durable Goods at 14:30 in April, there are no important dates to come.
The Bernstein-Bank wishes you successful trades and a relaxing weekend!

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

24.05.2019 – Daily report. The stock market bulls have taken over the floor again: The Frankfurt stock market presented itself firmly on Friday noon. However, the rebound seems somewhat fragile after the disappointing Thursday. Because really solid fundamental news, which underpinned the plus in the DAX, was missing recently.

DAX again above 12,000

With a recent gain of around 0.8 percent, Germany’s leading index returned above the 12,000 mark. A large part of the counter-movement was probably due to short covers. Because there was little news about the China-USA customs dispute. US President Donald Trump had announced on Thursday that the dispute over Huawei could be resolved within the framework of a trade agreement with China. At the same time, however, he described the telecom supplier as “very dangerous”. There was silence about the Iran crisis. There was movement in Brexit: British Prime Minister Theresa May announced her resignation on June 7. But what should the way out of the impasse look like?

Wall Street in the red

The fact that investors in New York had increased their access towards the end of trading on the eve of the trading day did, after all, lead to cautious optimism in Frankfurt. Nevertheless, the bottom line remained a loss for the important US indices. The Dow Jones fell by 1.1 percent to 25,490 points. The S&P 500 lost 1.2 percent to 2,822 points, and the Nasdaq 100 fell to its lowest level in two months, saying goodbye 1.5 percent weaker at 7,308 points.

Wisps of light in no-man’s-land

And so we take another brief look at some basics of chart analysis: Yesterday, Thursday, the DAX closed exactly on the 200-day line. Even more interesting is the situation on Wall Street, where chart technology provides vivid examples of investors’ indecision. We recently pointed out to you in a special report that the important indices are currently oscillating between bullishness and bearishness in no-man’s-land. And look: Yesterday the Dow Jones closed on the 200-day line. The S&P 500 hangs between the 50-day and 200-day lines, the same as the Nasdaq Composite and the Nasdaq 100. So the indicators are caught between the two moving averages.

Asia at a loss – Treasuries in demand

Asia also felt the effects of helplessness. On Friday, the Nikkei lost 0.2 percent to 21,117 points. However, the Hang Seng gained 0.3 percent to 27,354. As so often when the direction is unclear, investors first parked their money in a safe haven: US Treasuries were in strong demand. Ten-year government bonds rose to their highest level since autumn 2017, with yields falling to 2.3 percent.

Oil price rebound

In line with the DAX, the price of oil also rose again somewhat. On Thursday, the price for West Texas Intermediate fell below the 60 dollar mark for the first time since the end of March. US reserves had risen to their highest level since mid-2017. In addition, a trade war between China and America is likely to stifle demand – the People’s Republic is the world’s largest oil importer.

This is what the day brings

Friday is likely to be an outdated model for stock market traders: Except for the US Order Intake for Durable Goods at 14:30 in April, there are no important dates to come.
The Bernstein-Bank wishes you successful trades and a relaxing weekend!

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

23.05.2019 – Special report. The customs dispute between China and the USA is threatened with escalation, which could end in an open trade war. Washington wants to put at least five more Chinese companies from the security sector on the blacklist. This is an interesting move by the Americans that directly targets the security needs of the communist leadership. We analyse the background and show what opportunities there are for CFD traders.

US attack on Big Brother China

In our stock market report, we had just expressed the suspicion that the USA, after Huawei and Hangzhou Hikvision Digital Technology, the world’s largest manufacturer of video surveillance systems, would probably add further companies to the blacklist. As soon as our Daily Report from Wednesday went live, corresponding news hit the market.
The USA is currently investigating whether other Chinese companies will be blocked from cooperating with global partners. The financial blog “ZeroHedge” named the names: Megvii Technology develops technology for face recognition. iFlyTek is working on software for voice recognition. And Meiya Pico focuses on digital forensics and cyber security. The blog also referred to Bloomberg – the news agency also called Zhejiang Dahua Technology, also a provider of video surveillance technology. These shares have already been shaken on the stock exchange and are likely to be short candidates until the customs dispute is resolved.

Police state in sight

The USA is apparently targeting the Chinese police state. The possible calculation behind it: If the surveillance technology doesn’t work as soon as the economy slides into recession in the trade war with the USA and the people grumble, then it becomes uncomfortable in the Maoist leader bunker. The sheer number of surveillance cameras proves that the old Communist Guard fears the rebellious people. A total of 600 million cameras are to be installed in China. The old cadres still have the memory of the Tiananmen massacre thirty years ago in their minds – the demonstrations for more democracy proved how unpredictable the masses are.

National pathos

The fact that the Chinese CP is apparently more than nervous in the meantime underscores the nationalist resentments that are currently being stirred up. President Xi Jinping compared the problems with a “new long march”, referring to the country’s founding myth. Recently, state broadcasters have been showing anti-American films about the Korean War again. In addition, the “Trade War Song”, a former civil servant’s idea, is circulating in the social networks. It says: “Trade war, trade war! Tens of thousands of Chinese share the bitter hatred of the enemy”. The song is based on the soundtrack of the film “Tunnel War” from 1965, in which Chinese fight against the invasion of Japanese troops in the Second World War.

The strategy could work out

Our conclusion: The USA has hit a sore spot with the security industry because it is the life insurance of the elite. If Beijing also resists, China could be forced to give in. Especially since the USA has already begun to substitute Chinese goods. As an analysis by Deutsche Bank shows, imports from the rest of the world rose by around 15 billion dollars between the beginning of the year and March, while imports from China fell by around 15 billion dollars. So anyone who believes that China must give in should position themselves in the bull camp on Wall Street – if the customs dispute is resolved, the stock market will boom.

The leadership needs the weak yuan

But until that happens, Beijing is doomed to preserve the prosperity of its people under all circumstances. The means of choice could be to devalue the yuan to make exports cheaper.

Counterattack on Apple and Rare Earth Elements?

Furthermore, the state leadership must not lose face, so countermeasures against the USA could be pending. One possibility is rare earth elements – the majority of US imports come from China; the country currently also produces almost 40 percent of these metals, which are important for the high-tech industry, such as lanthanum, neodymium or yttrium. Since a boycott would put domestic industry champions such as China Rare Earth Holdings in turbulence, the Chinese are more likely to raise prices drastically. If the Americans can’t switch to other suppliers, Chinese corporations would probably gain on the stock market because sales are rising.
Another target for the Chinese anger is already Apple. A boycott campaign is currently underway in China – away from the iPhone towards the Huawei smartphone. It cannot be ruled out that Beijing will also officially tighten the screws at component supplier Foxconn and stop delivery. With corresponding consequences for sales and the stock market price of Apple.

You see: Politics offers CFD traders interesting investment opportunities.
We look forward to the next steps in the trade dispute.

This is what the day brings

The Thursday schedule is well filled. At 2.30 p.m. German time, for example, the weekly US first-time applications for unemployment benefits are being made via the tickers. At 3.45pm the Markit Purchasing Managers Index Service for May follows, ditto the manufacturing index for May. New US construction sales are scheduled for 16:00 in April.
The Bernstein Bank wishes successful trades!

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

23.05.2019 – Daily report. The bears determine what happens on the Frankfurt Stock Exchange. The ifo index disappointed. Once again, scepticism about the outcome of the customs dispute between China and the USA gained the upper hand in global trading. Washington is likely to put further Chinese companies from the security sector on the black list.

Investors fear stocks

Weak stocks; Japanese yen, Swiss franc and US bonds firm: roughly speaking, this is the typical pattern on the trading floor when worries about a Chinese-American trade war take over. The DAX slipped by almost two percent by noon. At least at Daimler there is an all-clear for the investors: The stock slipped mainly because of the dividend payout. The situation is less good for Deutsche Bank shares: on the day of the Annual General Meeting, the share price hit a record low of 6.35 euros.

Ifo index disappointed

The Ifo index provided food for the bears: the business climate fell from 99.2 to 97.9 points, the second time in a row. Most analysts had expected only a slight drop to 99.1 points. The mood among the 9,000 managers surveyed is therefore poor. “The German economy continues to lack momentum,” commented Ifo President Clemens Fuest.

Customs dispute continues to weigh on the economy

However, the customs dispute between China and the USA remained the determining issue. According to media reports, Washington is investigating whether it will blacklist at least five other Chinese companies in the security sector. Reactions in the Chinese state press also suggested an escalation.

Overseas sales

Previously, Asian investors had positioned themselves accordingly on the sell side: The Nikkei lost 0.6 percent to 21,151 points and the CSI 300 even lost 1.8 percent to 3,584 points.
Wall Street also closed Wednesday in the red. The Dow Jones index closed 0.4 percent lower at 25,777 points. The broader S&P 500 fell 0.3 percent to 2856 points. The composite index of the technology exchange Nasdaq lost 0.5 percent to 7,750 points. The minutes of the last meeting of the US Federal Reserve hardly moved the prices. As expected, the Fed is sticking to its cautious monetary policy.

May probably on the verge of collapse

Meanwhile, forex traders are once again looking to Britain. According to “The Times”, the unfortunate Prime Minister Theresa May wants to announce her resignation this week. The probable date for her resignation is tomorrow, Friday. Conservatives will probably experience a violent debacle in the European elections and the Brexit supporters will triumph. Against the dollar, the pound slid to 1.2608 dollars, its lowest level since January.

This is what the day brings

The Thursday schedule is well filled. At 2.30 p.m. German time, for example, the weekly US first-time applications for unemployment benefits are being made via the tickers. At 3.45pm the Markit Purchasing Managers Index Service for May follows, ditto the manufacturing index for May. New US construction sales are scheduled for 16:00 in April.
The Bernstein Bank wishes successful trades!

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

22.05.2019 – Special report. The indecision on the US stock exchange has been palpable over the past few days. The chart technique is visible proof of this: Wall Street, with all its important indices, is trapped in no man’s land between the moving 50-day average and the 200-day line. The indices won’t remain there forever – soon it’ll be hopping or topping.

No crisis clarification in sight

One step forward, one step back – global trade is waiting for a clear announcement in the various crises. The decisive topics were and are the customs dispute between China and the USA as well as the boiling up of the Iran crisis with potentially violent effects on the global oil market. According to a survey by Reuters/Ipsos, 51 percent of Americans expect a military conflict in the coming years. This is eight percentage points more than in a similar survey in June. Enough sugar in the tank to make the stock market engine stutter.

Caught between 50 and 200-day line

As a result, both S&P 500, Nasdaq 100 and Nasdaq Composite have slipped below the 50-day line in past sessions. And here all indices on the daily candle chart hang above the 200-day line, which acts like a magnet on prices from below. Most of all, the high-tech indices are still defending themselves against the downward pull.

Particularly strong skepticism in Dow Jones

The Dow Jones Industrial showed the least resistance to the pull: Earlier than the other indices, it entered the region between day and night.

The index has now relatively clearly marked the 50-day line as the upper resistance, from below the 200-day line serves as support. What does that tell us? Clearly, investors in the old economy are far more risk averse than colleagues who invest in high-tech. No wonder, they are more dependent than others on solving political crises. Keywords are tariffs, fair trade, booming domestic economy.

Sideways step, joy fireworks or crash

This raises the question of how things could continue. Sometimes the indicators leave the terrain of the undecided quite unspectacularly with a sideways movement. But sometimes not – a big bang and a fall into bear territory is the second variation. A loud cry of joy and an outburst upwards into the bull region is the third possibility.
So be sure to keep an eye on the regular market updates on your trading system in the coming days. And even more attentively than before. A decision on the American stock exchange and in global trading is in the offing. There are enough topics that trigger either a buying frenzy or a bear market.

The Bernstein Bank wishes you every success with your trades!

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.