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22.05.2019 – Daily report. What’s going to happen with the big issues in the world? No movement in the customs dispute between China and the USA. Perhaps even new punitive actions by the Americans. More provocations about Iran. It’s no wonder that the Asian stock market remained on the sidelines. Nevertheless, the DAX gained moderately.

The DAX wants to go up

The DAX posted moderate gains on Wednesday afternoon. The targets from the USA looked good: The Dow Jones Industrial advanced by 0.8 percent to 25,877 points on Tuesday. The US government loosened the strict measures against Huawei that had only been enacted last week. For an initial period of 90 days, some transactions are now permitted again, primarily for the supply of smartphones that have already been delivered and the operation of mobile networks. The Nasdaq 100 recovered by around 1 percent to 7451 points and the S&P 500 climbed by 0.9 percent to 2864 points.

Chinese water torture against Beijing

But then news about the tariff dispute hit the US futures and the yuan, the Nikkei crawled up by only about 0.1 percent to 21,283 points. And the Chinese CSI 300 slipped 0.5 percent to 3,649 points.
That had happened: According to a report in the New York Times, the Trump administration wants to prohibit another Chinese high-tech company from buying American technology. Specifically, Hangzhou Hikvision Digital Technology is to be blacklisted. The company, which is controlled by the Chinese government, is currently the world’s largest provider of video surveillance systems and is active in around 100 countries. Officially, Hangzhou is to be punished for monitoring the Uighurs in China.
This means that Washington is now taking on the next important Chinese group after Huawei. Here, too, there is news. “ZeroHedge” reports that, according to Bloomberg, Huawei has been a candidate for a fist lien in the customs dispute with China for months. The news agency reported that the Trump team had waited in the negotiations until the blacklisting of Huawei turned into a dead end, citing unnamed insiders. Any previous action could have torpedoed the negotiations. The whole thing looks very much like an American attrition tactic against China. It is hard to believe that Washington will not soon be targeting other Chinese heavyweights.

Much action in the oil trade

Let us look at the second major conflict – Iran and co. Huthi rebels supported by Tehran have flown a drone attack on a Saudi airport. The insurgents stressed that the attack was directed against an arms depot in the military part of Najran airport. The Saudis claimed that the Huthis tried to hit a civilian target. According to the New York Times, American intelligence analysts and a US army unit are stationed in Najran.
Meanwhile, Iranian President Hassan Rouhani has rejected an offer of talks by American President Donald Trump. He told the state news agency IRNA that he would prefer diplomacy. But the current situation is unsuitable for talks. He added: “Resistance is our only choice”. So the situation remains explosive.
The most recent meeting of the OPEC+ group, on the other hand, brought relaxation in the oil market. According to Reuters, the cartel and its supporters want to soften the production cut and bring 800,000 barrels of oil a day more onto the market. Alternatively, the cut could be trimmed from 1.2 to 0.9 million barrels. The matter is to be clarified at the meeting in June.

Today’s agenda

The view remains on the appointment calendar. At 4.30 pm German time, the US crude oil inventory data of the state Energy Information Administration (EIA) is transmitted via the tickers. And at 8 p.m. the minutes of the Fed’s Open Market Committee of 30 April/1 May will be published. 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.

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!

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.

20.05.2019 – Daily report. Hardly any movement on the Frankfurt Stock Exchange on Monday midday: After the good previous week, investors initially held back in German stock trading. The DAX crumbled. There was no news in the customs dispute between China and the USA. Nerves remain tense in the energy market: US President Donald Trump threatened Iran.

DAX shows itself listless

After a sideways start, the DAX fell by around three-quarters of a percent. Deutsche Bank tested the all-time low of EUR 6.68, which had been marked at the end of December. According to a report in the “New York Times”, executives of the money house are said to have prevented employees from reporting conspicuous transactions in Trump companies and his son-in-law Jared Kushner to the financial supervisory authorities. Deutsche Bank rejected the accusations.

No progress in customs dispute

Many investors now assume that the negotiations between China and the USA have reached a dead end. As expected, the Organisation for Economic Co-operation and Development has issued a warning regarding the customs dispute. OECD Secretary General Angel Gurria told CNBC that the conflict is holding back global recovery and jeopardising investment and growth.
Meanwhile, the People’s Republic of China has revealed the direction the leadership is taking. The social media blog “What’s on Weibo” reported that CCTV 6, the state broadcaster specializing in films, had broadcast three anti-American movies on the Korean War from the 1950s and 1960s – reaching 500 million people in 23 provinces. This could be dismissed as a tasteless aberration if the editor-in-chief of the Global Times, Hu Xijin, had not summed up the purpose of the action: “There are no negotiations between equals without struggle,” wrote the communists’ mouthpiece on Twitter.

Asia without a clear trend

No clear direction for global trading was given by investors in Asia in the morning: The Japanese Nikkei 225 closed 0.2 percent higher at 21,301 points. In Japan, economic growth grew by 0.5 percent in the first quarter. In China, on the other hand, the stock market remained subdued: the CSI 300 fell by 0.9 percent to 3,618 points.

New York powerless

Wall Street also lacked energy on Friday. Although the Dow Jones had been trading up for a while, it gave way in late trading and took off into the weekend with a minus of 0.4 percent at 25,764 points. The weekly loss of 0.7 percent is manageable. The S&P 500 had slipped by 0.6 percent to 2860 points on Friday and the Nasdaq 100 lost 1 percent to 7504 positions. The mood of US consumers had improved considerably in May and had risen to its highest level in a good 15 years. The composite index of leading economic indicators of the private research institute Conference Board also improved in April. All data can be found here: Market Mover

Fear of the spark in the oil field

There is still tension on the oil market. US President Trump has threatened Tehran with destruction. On Sunday evening he twittered: “If Iran wants to fight, this is the official end of Iran. Never threaten the United States again! The price of oil was higher than it has been for three weeks. The trigger was probably the impact of a rocket about 1.6 kilometers away from the American embassy in Baghdad. Previously, the commander of the Iranian Revolutionary Guards, Hussein Salami, had ignited the rocket: Although Iran and its Revolutionary Guards did not want war, they would not be afraid of it, he told the semi-state news agency Isna. The US troops were “easy to defeat” because, unlike the Revolutionary Guards, they were afraid of death.
As always, it’s worth keeping an eye on the news. Especially on a day when there are hardly any important scheduled dates. The Chicago Fed National Activity Index for April at 2.30 p.m. German time should be highlighted. We wish you a successful week!

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.

17.05.2019 – Daily report. First of all, take profits with you: On Friday morning, investors in Frankfurt kept a low profile for the time being. After the price run of the previous day, many brokers waited for new economic data in the afternoon. In addition, the small downfall at Eurex is imminent. This could shake up online stock trading considerably. The New York targets were otherwise positive. Meanwhile, China was sceptical about Huawei.

Profit taking on the German stock exchange

The morning is not a good time window for the bulls in the DAX. After the moderate late rally on Thursday, investors initially held back in early Friday trading as well. The DAX was recently around three-quarters of a percent weaker. The possible shift of higher US tariffs to European car imports had caused the gain on the previous day. However, the BMW share was conspicuous on Friday: at the end of the DAX, it was quoted ex-dividend, although the falling return on sales and a provision worth billions for alleged antitrust violations also weighed on the share price.
Volatility in the market as a whole has also been created: At noon, the Eurex derivatives exchange is due to experience its so-called small decline. Then, among other things, the May options on the DAX and the Euro-Zone benchmark index EuroStoxx 50 expire. Before this date, major addresses often try to push prices in the desired direction. This sometimes results in surprising, strong swings. So please keep an eye on your trading platform.

Mixed trend in Asia

Asia presented itself mixed. The Nikkei gained 0.9 percent to 21,250 points in Tokyo on Friday. This week, however, the balance sheet stands at minus 0.4 percent. In Japan, Sony caused a sensation with a price jump of 10 percent: The electronics group reported a cooperation with Microsoft and also a share buyback with a volume of the equivalent of 1.6 billion euros.
In China, on the other hand, the bears were in charge. The CSI 300 slipped by 2.5 percent to 3,649 points. The reason: US President Donald Trump has fuelled the customs dispute with China and declared a national state of emergency in telecommunications. This clears the way for measures against the Chinese telecom group Huawei. The communists in Beijing initially reacted verbally: China is determined to protect its national interests, according to an editorial in the People’s Daily.

Confidence in New York

Wall Street had rallied on Thursday thanks to strong economic data and corporate figures. Walmart and Cisco were convincing. Ditto the business climate in the Philadelphia region in May. In addition, the number of first weekly applications for unemployment benefits had fallen more than expected. The US housing market also proved robust in April. All important economic data can be found here: Market Mover
As a result, the Dow Jones benchmark index closed 0.8 percent higher on Thursday at 25,862 points. The S&P 500 advanced 0.9 percent to 2,876 points. The technology-driven Nasdaq 100 rose by 1.0 percent to 7,580 points.

Today’s agenda

In the USA, consumer confidence at the University of Michigan will be published at 4:00pm. At the same time, the leading indicators for the American economy are supposed to be running on the ticker.
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.

16.05.2019 – Daily report. The DAX had only just risen – because US President Donald Trump probably wants to postpone threatening import duties for cars from Europe. The cold shower came next: Apparently he expects something in return from the European Union. Exports to the USA are to be capped. The DAX has slightly decreased.

DAX narrowly maintained

Little movement on the trading platform: After the nice gains on Wednesday, the German equities presented themselves somewhat weaker on Thursday. In the morning, the DAX moved just below the 12,100 mark. What is the future for German car stocks? According to the latest media reports, Trump will postpone the decision on punitive tariffs for European cars by up to six months. Actually the decision should have been made at the end of this week. But then the news that a concession is probably tied to conditions.

No clear trend in Asia

The Nikkei had fallen 0.6 percent in the morning to 21,063 points. The Chinese CSI 300 gained 0.5 percent to 3,744 points. Meanwhile, it is becoming clear how China is going to finance its stimuli with which, for example, it is pushing up stagnating car sales: with the sale of American government bonds. China sold $20.5 billion worth of Treasuries in March, the US Department of Commerce announced Wednesday. That was the highest value since October 2016. At the same time, of course, it is one of the means to hit the US in the customs dispute. However, Beijing remains the largest creditor of the USA: the People’s Republic still held bonds worth 1.1 trillion US dollars in March. But if Beijing buys yuan instead, how can the domestic currency be lowered to boost foreign trade? Things remain exciting.

Rising courses in New York

Wall Street was in a buying mood on Wednesday. Prices only turned down after the disappointing US retail data. In the wake of the announcement that Washington apparently does not want any further conflict over car tariffs with Japan and Europe apart from the customs dispute with China, investors resorted to the news. The Dow Jones Index ended the day up 0.5 percent at 25,648 points. The market-wide S&P 500 gained 0.6 percent to 2,850 points. And the Nasdaq Composite gained 1.1 percent to 7,822 points.
Previously, Trump had again exerted pressure on the Federal Reserve. With a little help from the Federal Reserve, economic growth in the United States could be increased to five percent, he said in Louisiana. All it needs is lower interest rates and a “little quantitative easing”.

Escalation in Yemen

Meanwhile, traders in the oil market continue to look forward to the heated situation between Iran and Saudi Arabia. In retaliation for a drone attack on an oil pipeline, the Saudis bombed the Yemeni capital Sanaa, which is controlled by the Huthi rebels. The insurgents are supported by Iran. Among other things, the attacks were directed against arms depots.

Today’s agenda

The afternoon brings some important economic data. At 2.30 p.m. German time the building permits from the USA will be received. The Philadelphia Fed Index is ticking over at this time. Of special importance at the same time are the first applications for unemployment assistance. As always, you will find all dates here: Market Mover
Bernstein Bank wishes you successful trades!

Fresh US data and Brexit launch in London

We are curious to see if the US economic data coming in this afternoon will underpin the renewed optimism. At 2.30 p.m. German time, retail sales will be reported in April, as will the Empire State Index for May, which provides information about the New York region’s economy. At 3.15 p.m. the Federal Reserve will provide figures on industrial production in April, i.e. capacity utilization. The weekly oil report is also due at 4.30 pm.
Traders in the British pound should also note the date for the next act in the exit drama: British Prime Minister Theresa May wants the House of Commons to vote on the Brexit agreement for the fourth time at the beginning of June.
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.

15.05.2019 – Daily report. “Speak softly and carry a big stick” – the former president Teddy Roosevelt already knew that. Donald Trump imitates him and first calmed down the stock markets with gentle statements about the customs dispute. But investors don’t quite trust the apparent peace – the DAX is crumbling. Poor economic data from China seems to speak for the strong position of the USA. Meanwhile, new figures in the afternoon provide information about the American economic situation – so be sure to keep an eye on your regular market updates.

Dithering in Frankfurt

A little up, a little down – in early trading on Wednesday, the DAX first regained the 12,000 mark before giving back the bastion. The day before, the German leading index had recovered by around one percent after conciliatory words by Trump on the trade war with China. “If they want a deal, it’s absolutely possible,” he stressed.
Robust data from the German economy only caused little buying mood. Between January and March, the gross domestic product grew by 0.4 percent compared to the previous quarter, according to the Federal Statistical Office in Wiesbaden. In the fourth quarter of 2018, GDP had stagnated, and in the third quarter it had even fallen slightly. All data can be found here: Market Mover
In the reporting season, RWE temporarily moved to the top of the DAX on Wednesday after their first quarter was interpreted as solid.

Hope for state aid in Asia

In Asia, investors took action because they immediately interpreted negative Chinese economic data as an argument for new government stimuli. Both retail, industrial production and investment figures were disappointing. The question is how deep the pockets of the red emperors really are – and whether China can help its industry indefinitely if there really is a trade war with the US. The CSI 300 rose by 2.3 percent to 3,727 points. The Japanese Nikkei 225 closed 0.6 percent higher at 21,189 points.

Shrill sounds in China

Meanwhile, the Chinese leadership has sent its editorial offices to the front. The “Global Times” wrote that the USA fought for greed and arrogance – and the morale of the opponent would soon break. China is fighting to defend its legitimate interests. In an indirect appeal to boycott American goods, the paper also conjured up a “people’s war”. The Chinese television station CCTV reported that China was fighting for a “new world”. Well, yes.

Oil market intensifies

Although Donald Trump can by no means count on his media – on the contrary – he is very popular thanks to his hard line: with over 45 percent his approval is higher than it has been for two years. And what values does Europe represent? Appeasement. The Spanish have ordered their warship “Méndez Núñez” home from an American naval unit heading for the Persian Gulf. The mullahs in Tehran will certainly reward this. Meanwhile Saudi Arabia reported that two pumping stations of a larger Saudi pipeline were attacked yesterday by drones loaded with explosives. Although the damage is only minor, it can have political consequences. A television station of the Yemeni Houthi rebels supported by Iran claims the attack for themselves.

Optimism in New York

However, investors on Wall Street on Tuesday had ignored the threat of conflict with Iran and hoped for an amicable settlement between China and the US. At the closing bell, the Dow Jones recorded a gain of 0.8 percent to 25,532 points. The S&P 500 also climbed 0.8 percent to 2834 points. The technology-driven Nasdaq 100 gained around 1.1 percent to 7402 positions.

Fresh US data and Brexit launch in London

We are curious to see if the US economic data coming in this afternoon will underpin the renewed optimism. At 2.30 p.m. German time, retail sales will be reported in April, as will the Empire State Index for May, which provides information about the New York region’s economy. At 3.15 p.m. the Federal Reserve will provide figures on industrial production in April, i.e. capacity utilization. The weekly oil report is also due at 4.30 pm.
Traders in the British pound should also note the date for the next act in the exit drama: British Prime Minister Theresa May wants the House of Commons to vote on the Brexit agreement for the fourth time at the beginning of June.
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.

14.05.2019 – Daily report. Following the share price storm on Monday, shares in Frankfurt have recently recovered slightly. Conciliatory tones from Washington in the customs dispute with China caused a subdued buying mood. In addition, investors analyzed fresh quarterly figures from Germany. Traders also kept an eye on the oil price.

Quarterly financial statements in Frankfurt

After the strong minus on Monday, German investors hesitantly stocked up on equities again. The DAX climbed slightly, but was still just under 12,000 points. However, the worse than expected ZEW Indicator of Economic Sentiment dampened the buying mood. All economic data can be found here: Market Mover
Fresh quarterly figures ran through the tickers. Allianz reported a surprisingly strong increase in profits at the beginning of the year. ThyssenKrupp showed no clear trend – the industrial and steel group had reported a loss for the second quarter. Merck reported somewhat weaker than expected quarterly figures. Bayer was under pressure: After another defeat in court in a US glyphosate lawsuit, the stock temporarily slipped to its lowest level since 2012. Bayer is to pay more than two billion dollars in damages.

Optimism in Washington

However, the decisive issue again was the customs dispute. Despite yesterday’s escalation in the customs dispute, US President Donald Trump spread optimism. He was confident that he would find a solution to the trade war with China. He announced a meeting with Chinese President Xi Jinping at the G20 summit in Osaka at the end of June. Furthermore, there was still no decision on a further round of US punitive tariffs on Chinese goods. US futures then rose moderately. At 2.30 p.m. German time, the American import and export prices will provide information on how US foreign trade is going today.

Sales strike in Asia

Investors in Asia were reassured little by Trump’s intervention, especially as the stock market digested bad news from China. In the People’s Republic, car sales in April were down 17.8 percent on the previous year, according to the manufacturers’ association CAAM. This was the tenth month with a minus in a row. Buyers are apparently waiting for government incentives to buy – or they fear an economic crisis as a result of the customs dispute with the USA. The Chinese CSI 300 lost 0.6 percent to 3,645 jobs. In Tokyo, the Nikkei also closed 0.6 percent lower at 21,067 points.

Crash in New York

On Monday, US indices marked their worst day since early January. The Dow Jones closed 2.4 percent lower at 25,324 points. The S&P 500 fell 2.4 percent to 2,811 points. High-tech stocks were hardest hit: the Nasdaq Composite fell by 3.4 percent to 7,647 points. Apple slipped almost six percent. The group needs China as a growth market and also suffered a defeat in a US antitrust case.

Oil in the focus of traders

Meanwhile, the oil market remains exciting. According to the Wall Street Journal, the USA blames Iran for the sabotage of four tankers off the coast of the United Arab Emirates. Meanwhile, Russia has sent mixed signals as to whether it wants to continue to participate in OPEC’s cut in production. Perhaps OPEC will comment on this when the cartel presents its monthly report at 1 p.m. German time. Otherwise the data on US crude oil stocks of the American Petroleum Institute are due at 10.30 p.m. German time.
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.

13.05.2019 – Special report. China and the USA apparently slide into a historical confrontation. China has now announced counter tariffs in the customs dispute. Another escalation threatens, Wall Street and global trade are upside down. Traders now need an overview of who has stashed more ammunition in their arsenal in the epic conflict. And what assets promise successful investments in the turmoil of battle.

Who wins, who loses?

A confusing mixture in the customs dispute: The fronts between the world’s two largest economies have hardened. The first reaction of the financial markets on Monday to the worsening situation over the weekend points the way for further developments on the financial market. Chinese equities fell, as did the futures on US indices and the DAX. Investors fled to US government bonds and the yen – both assets are considered safe havens in times of crisis. Outside the People’s Republic, the dollar temporarily rose to a four-month high against the yuan.
What remains to be added in the medium term is that US agricultural products that are heavily exported to China – in other words, soya in particular – would suffer from an open trade war. Ditto world trade, which is likely to have a strong negative impact on the oil price in the medium term.

The thread of conversation has been cut

What recently caused particular nervousness on the floor was that there was no concrete date for a new round of negotiations. US economic advisor Larry Kudlow told Fox News that China had invited trade commissioner Robert Lighthizer and finance minister Steven Mnuchin to Beijing again – but without an appointment. Kudlow added that US President Donald Trump would probably meet Chinese President Xi Jinping at the G20 summit in Osaka, Japan, at the end of June.

Trump is calm

Trump gave the Chinese chief negotiator, Vice Prime Minister Liu He, a bump on his flight home on Friday via Twitter: “The conversations had been “very pleasant”. But there was “absolutely no hurry” to end them. In the meantime the “process has begun to impose additional 25 percent duties on the remaining 325 billion dollars”. Trump added that an agreement would be “much worse” if it was negotiated in his second term. Trump also set Beijing a deadline of one month to seal an agreement, according to news agency Bloomberg, otherwise the new special tariffs will also enter into force definitively.

China strikes back

Liu He, struck a new note on Friday when he said “every nation has its dignity” and stressed that China could make “absolutely no concessions” on fundamental issues. How does a diplomat want to retreat behind such red lines? He announced not yet concrete countermeasures. On Monday then the confirmation: From 01 June China wants to raise tariffs on US goods worth 60 billion dollars from 10 to 25 percent.
On Friday, He also made three Chinese core demands for the first time: First, all US additional tariffs would have to be eliminated. Secondly, the quotas for planned Chinese purchases of US goods would have to match real demand. Thirdly, the text of the agreement must preserve the “dignity” of both countries. What is supposed to be meant with that? Perhaps this: Washington expects from China that Beijing will put the results of the negotiations into legal form – and not only into government decrees. Washington therefore wants absolutely binding commitments from which China will not get out. This is probably an unprecedented innovation for Beijing.
On Sunday, China also struck little conciliatory note through the state-controlled Chinese media. The editor-in-chief of the Global Times, Hu Xijin, tweeted that from the perspective of Chinese politics there was hardly any room for compromise. Among experts, the journalist is regarded as an insider of the Chinese leadership and a mouthpiece of the communists.
On Monday, he added on Twitter: China could stop buying US agricultural products, buy fewer jets from Boeing, restrict service trading. In addition, Chinese scholars discussed the possibility of throwing US government bonds onto the market. Beijing has thus shown Washington its instruments of torture.

America is on the long end of the stick

But how exactly will the Middle Kingdom strike back? According to Statista, the USA only shipped goods worth 120 billion dollars to China in 2018 – these goods are already largely subject to Chinese “counter-tariffs”. The Red Dragon, on the other hand, exported products worth around 540 billion US dollars to the USA. So there is still room for improvement. In relative terms, a whopping 19 percent of Chinese exports go to the USA. In contrast, only seven percent of US exports are shipped to China.
USA also has a traditionally strong domestic economy. If imported Chinese goods become too expensive, domestic companies will immediately be found to take over the job – or manufacturers in India or South Korea who jump into the gap. On the other hand, the hardliners in China are of course also hoping that in future domestic companies will offer the products that the Americans are still supplying. And if China introduces stimuli, America can do the same; in addition, the Federal Reserve could now lower interest rates after all.

Threatening Yuan devaluation

Perhaps Beijing will devalue the yuan in order to make world trade exports cheaper. This will erode the purchasing power of the Chinese middle class. What Beijing might well want – because many chuppies – Chinese urban professionals – would probably invest their money in real estate for fear of the yuan crash, which could prevent the collapse of a market plagued by high vacancy rates. Otherwise, China’s appetite for gold could also be fuelled.

US bonds as a means of power

What remains is the nuclear option: China is the largest holder of American bonds and could throw US government bonds onto the market in retaliation. The People’s Republic still holds about 1,200 billion US dollars, Japan as number two about 1,000 billion. This would have a considerable impact on the US economy, which is running on pump. The first reaction of investors shows that nobody believes in this possibility yet – but traders should keep it in mind.

Conclusion: As always when politics interferes in the market, much is uncertain. The only thing that is clear is that volatility should increase if the situation escalates.

Bernstein Bank wishes you every success with your investments!

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.

13.05.2019 – Daily report. No roller coaster is more exciting at the Oktoberfest: On Friday, the latest hopes for a settlement in the customs dispute between China and the USA had already led to an impressive turnaround on Wall Street. On Monday, however, global trade rolled back a little towards the abyss. Washington apparently wants to strike with hard bandages. China sees no room for compromise and threatened retaliation.

Threatening trade war depresses DAX

What a hell of a ride: From Best Case to Worst Case in just one weekend. After the recent escalation in the trade dispute, the futures for the US indices were negative on Monday morning. The DAX crumbled by just under one percent and slipped below the 12,000 point mark. Investors fled into US government bonds and the yen, and both assets are regarded as safe havens in times of crisis. Outside the People’s Republic, the dollar temporarily rose to a four-month high against the yuan. On the floor there was a widespread insight that the new US punitive tariffs against China on Friday were probably not just a bluff – they were perhaps harbingers of a trade war.
The German carmakers recorded a minus on Monday. No wonder, because any Chinese counter-tariffs also affect BMW and Mercedes, which export from their factories in the USA to China. Once again ThyssenKrupp caused a sensation: The stock had shot up by almost 30 percent on Friday – most recently, there was a 7 percent drop in profits on the trading platform.

No compromise in sight

US President Donald Trump fired a Twitter tirade on the weekend: “We’re exactly where we want to be with China.” The US would collect double-digit billions in customs duties from China. The US administration naturally hopes that domestic companies will step into the breach and produce many goods in the future that are still being imported from the People’s Republic.
China’s chief negotiator, Deputy Prime Minister Liu He, also struck a new note on Friday when he said “every nation has its dignity” and stressed that China could make “absolutely no concessions” on fundamental issues. A thick red line. He also announced countermeasures. These statements were flanked on Sunday by the state-controlled Chinese media. The editor-in-chief of the Global Times, Hu Xijin, tweeted that from the perspective of Chinese politics there was hardly any room for compromise. Among experts, the journalist is regarded as an insider of the Chinese leadership and a mouthpiece of the communists.

Losses in Asia

Accordingly, most investors in Asia sold their shares. The Nikkei finally posted a minus of 0.7 percent to 21,191 points. The Shanghai Stock Exchange lost 1.2 percent to 2902 points.

Comeback on Wall Street

The Dow had only slipped about 400 points on Friday, only to make another remarkable comeback of 500 points. At the closing bell, the leading index brought a plus of 0.4 percent at 25,942 points into the weekend. Once again, we stress the importance of moving averages: The Dow traded exactly on the 200-day line. At the end, the indicator reduced its weekly minus to 2.1 percent. After a strong recovery, the S&P 500 closed exactly on the 50-day line on Friday, also posting an increase of around 0.4 percent to 2881 points at the end of the day. The technology-heavy Nasdaq 100 saved a small gain of 0.1 percent to 7587 positions.
The statements made by US Treasury Secretary Steven Mnuchin in a conversation with CNBC, which Trump later confirmed via Twitter, provided hope. According to this, the discussions with representatives from China were constructive. Trump stressed that the negotiations should be continued. Well, this situation is outdated again. There is no distraction in sight, because really important economic dates are not scheduled for Monday.

Nevertheless, 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.

10.05.2019 – Daily report. The Frankfurt stock market has calmed down for the time being – prices are rising. US President Donald Trump had cooled investors’ heated feelings about the customs dispute a little the evening before. And China and America are continuing to negotiate despite the recently increased punitive tariffs – and there is also a small loophole.

Recovery in Frankfurt

On Friday morning, the DAX made up some of the heavy losses of the previous day with a gain of around 1 percent. German exports were balm for the scarred broker souls: In March, exports had surprisingly increased by 1.5 percent compared to the previous month, according to the Federal Statistical Office. As always, all important economic data can be found here: Market Mover. However, the decisive issue was of course the threat of a trade war between China and the USA.

Deadline in the customs dispute

The American treasury rings the bell: Since this morning, 6:00 a.m. German time, the increased US special customs duties for Chinese exports to the USA have been taking effect. The special levies on imports of goods worth 200 billion dollars are increasing from 10 to 25 percent. Immediately after the increase, the Ministry of Commerce in Beijing announced “necessary countermeasures”. China’s chief negotiator Liu He criticized the move, but was conciliatory. “We want to resolve some of the differences honestly, confidently and rationally,” said the Deputy Prime Minister. “I think there is hope.” The two economies, the USA and China, are part of a complete industrial chain.
In addition, there is a loophole: the now increased criminal tariffs only apply to goods that are not yet in transit to North America. So all goods that left the Chinese ports before midnight on the US East Coast will remain lower valued. De facto, both delegations still have about two weeks until Chinese freighters leave for the Pacific coast of the USA. While the Nikkei fell 0.3 percent to 21,345 points, the Chinese CSI 300 rose by 3.6 percent to 3,730 points.

Calming in New York

The evening before, US President Trump had also distributed verbal beta-blockers to investors. He had received a “nice letter” from China’s President Xi Jinping and wanted to call the Chinese head of state. Accordingly, the brokers in New York first lowered their pulse. The Dow Jones recovered from its daily low of 25,517 points and closed at 25,828 points. A little hint for friends of chart technique: The Dow turned around just above the 200-day line. The S&P 500 closed 0.3 percent down at 2,871 points. The market-wide index crossed the 50-day line downwards over the course of the month, but closed almost exactly on top of it. The high-tech index Nasdaq 100 lost 0.5 percent to 7,583 positions. Investors also followed the 50-day moving average on this stock exchange: the indicator was exactly based on the indicator over the course of the day before turning north again.

How weak is the United States?

Let’s come back to the statement of Vice Prime Minister Liu He that China wants to solve the dispute “honestly”. What has meanwhile been reported in the “Wall Street Journal” about the monstrous Chinese about-turn of last Friday with the withdrawal of all previous concessions, raises doubts about the sincerity of the Chinese. Chinese President Xi Jinping and other senior officials have interpreted Trump’s repeated calls to Fed chief Jerome Powell to lower interest rates as a sign of weakness. The Chinese also felt encouraged to take a hard line as Trump stressed his “friendship” with Xi and praised Liu as well as Chinese economic policy. Beijing’s stance raises doubts that China will stick to agreements in the future and that a trade war will be avoided. CFD traders should keep this in mind.

This is what the day brings

The calendar still remains to be seen. Today, Friday at 14:30, real incomes in the USA for April and consumer prices in April are due. 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.