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09.05.2019 – Daily report. All seat belts fastened for crash landing: Today and tomorrow the decisive negotiations in the customs dispute between China and the USA are going on in Washington. An agreement seems increasingly unlikely. Beijing has meanwhile announced retaliation if America raises punitive tariffs as announced. The world’s stock markets remain in shock paralysis, the DAX slips. The fear indicator VDAX rises sharply.

First panic in Frankfurt

In view of the general situation, the German balance sheet season receded into the background. HeidelbergCement bucked the downward trend in the DAX. The building materials group beat the forecasts for profit and turnover. At Deutsche Telekom, the US business remained the profit driver. Continental reported a sharp drop in profits in the first quarter.
But what is all this compared to the threat of a trade war between the world’s two largest economies: The VDAX reached its highest value since mid-January. Its European counterpart, the VStoxx, also reached a four-month high.

Sales in Asia

Needless to say, Asian investors also pressed the sell button. The Japanese Nikkei slipped another 0.9 percent to 21,402 points. The Hang Seng lost 2.4 percent to 28,311 points.

Whirlwind on Wall Street

The day before, the customs dispute had stirred up the prices. US President Donald Trump ran at full speed yesterday at an event in Panama Beach, Florida. China had broken the deal – “they will pay for it”. He confirmed his intention to raise the special tariffs from 10 to 25 percent tomorrow. At least he still said, “don’t worry – everything will work out”, reports the financial blog “Zerohedge”. Previously, Trump had given investors hope via Twitter: the People’s Republic was showing renewed willingness to reach an agreement, the Chinese vice-government leader Liu He wanted to conclude an agreement.
In view of the turbulence, the Dow Jones Index closed yesterday at around 25,967 points, barely changed. The S&P 500 lost a moderate 0.2 percent to 2,879 points. The Nasdaq Composite fell by 0.3 percent to 7,943 points. However, the indices had reached their daily high shortly before the end of trading and then fell like stones.

Perfidious breach of promise by the Communists

Skepticism in the customs dispute is absolutely justified. Reuters yesterday reported disturbing details. The English news agency reported on the edited Chinese version of the draft treaty sent to the White House late Friday, citing half a dozen sources. Overall, Beijing had made an unexpected U-turn on a dozen issues. The edits from the Middle Kingdom systematically ran through the entire 150-page treaty and ignored months of negotiations.
In all seven chapters of the draft, Beijing had deleted earlier commitments. All in all, the communist regime had backed down a dozen questions. These include the core issues of intellectual property theft, industrial espionage, competitive advantages, access to financial services and currency manipulation. According to sources, however, China underestimated the Trump administration because for twenty years it had been getting what it wanted from former US presidents.

After the all-clear, before the trade war.

If the information is correct, the Red People’s Republic is not a trustworthy partner. Even if both sides still sign a deal, the question remains whether China will stick to it. Attentive brokers should consider the possibility of new turbulences or even a trade war for the future. As always, keep an eye on regular market updates on your trading platform.
In addition to the mega topic of the customs dispute, Jerome H. Powell, head of the Federal Reserve, will be speaking at 2.30 p.m. German time. The important question is this: Will the Fed perhaps lower interest rates after all in the event of a possible trade war and a stock market crash?
At the same time, US producer prices, the US trade balance in March and the initial applications for unemployment assistance are to be sent through the tickers. You can see all important dates here: Market Mover
Fear seems to increase further – and panic is always the signal for buying. But where exactly is the low? Anyone who professionally analyses the situation now will be richly rewarded in the near future – through deals with a good broker with a Bafin licence! The Bernstein Bank wishes you strong nerves and much 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.

09.05.2019 – Special report. The clock is ticking, the nerves in global trade are shattered: a final deal in the customs dispute must be made by Friday. Otherwise US President Donald Trump wants to impose new special duties on Chinese goods. The stock markets are trembling, everything is feverishly looking forward to the deadline. But what will happen? We shed light on the possible scenarios.

12 o’clock noon

Hollywood could not have staged the final shootout in a Western movie more beautifully: According to the financial portal “Marketwatch”, a final deal must be made in the customs dispute between China and the USA by Friday noon, 12:00 US East Coast Time. Otherwise Washington wants to impose new punitive tariffs on Chinese imports. What will happen next? On the one hand, the Bernstein Bank does not issue any investment recommendations on principle. On the other hand, we naturally don’t leave our customers out in the rain in turbulent times. We have therefore found an interesting analysis in the financial market for you on the possible scenarios and any resulting consequences.

Standard Chartered sees four possibilities

The British Standard Chartered Bank has made a very competent statement. Steve Englander, the head of foreign exchange trading for the G-10 countries, has listed four options for Friday plus the associated consequences in the customs dispute. So here is the essence of his paper.

1 – The magic rabbit – 25 percent

Option 1): Both sides pull a rabbit out of the hat in a magic trick – probability: 25 percent. The current threats could only be part of the choreography. Maybe China could play “trumping trum” shortly before the end of the ultimatum and throw the trump card on the table, one could always keep the deal from last week. The US administration could also claim this as a victory for itself. According to Standard Chartered, the stock markets would probably rise to new heights in this case. In the G-10 currency market, AUDJPY or AUDCHF would probably be the biggest winners. The USD would probably depreciate against most Asian currencies.

2 – New shift – 50 percent

The most likely option: 2) a new postponement for the introduction of special tariffs because of the “progress made” – 50 percent. This step would probably be neutral to slightly positive for the asset markets, although it looks as if the US has blinked in the duel with China and is satisfied with less than demanded. As in scenario 1, the dollar would probably weaken.

3 – Partial tariff increase – 10 percent

Probability number 3), according to Standard Chartered, would be the limited increase of some penalty duties. For example, the tariffs for goods that are already occupied with 10 percent could rise to 15 percent. Probability of occurrence: 10 percent. This version would be neutral to slightly negative for the financial markets. Because the introduction of penalty duties in the middle of the talks would be an invitation for the other side to leave the negotiating table. Investors would interpret such a step as crossing an important border and immediately speculate about countermeasures. Rather neutral would be limited tariff increases, which would only take effect in a few weeks’ time if there was no progress in the negotiations.

4 – Negotiations burst – 15 percent

According to Standard Chartered, the most risky outcome of the matter, although the probability of a complete increase in special tariffs and the termination of negotiations is only 15 percent. The question is whose economy and financial markets are stronger and who can withstand the pain better. The author suspects, however, that for both sides a bad deal is better than a “good” trade war. However, in this scenario, the JPY would be the big winner. The rest of Asia and highly risk-correlated currencies are likely to take a blow that surpasses anything they have taken so far. The second big trade would be the getaway into US bonds.

Fundamentally, there is much to suggest that the two economic giants will come to some kind of agreement after all. Of course with a deal that can be sold politically as a success. Both Beijing and Washington will not endanger the prosperity of the middle class and the domestic economy. But the devil is in the details. Ultimately, nothing can be ruled out when the mega-egos collide. So keep a constant eye on your trading platform – everything is possible and the opposite of everything.

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.

08.05.2019 – Daily report. Modest courage on the Frankfurt Stock Exchange: Although the clock is ticking in the customs dispute between China and the USA, some buyers again appeared on the floor. The deadline is expected to expire on Friday at noon on the American East Coast. Will a final customs deal be made by then? Anything seems possible. Meanwhile, few investors in the DAX are using the recent sell-off to hunt for bargains.

Minimal plus for the DAX

Finally a few green prices again on the trading platform: The DAX has worked its way up moderately on Wednesday morning, but at noon investors lost courage again. German industrial production proved to be an anti-depressant in March: it rose by 0.5 percent compared to the previous month, and many analysts had expected a minus of the same magnitude. In addition, four DAX companies reported figures. While the interim reports at Wirecard and Siemens led to price gains, investors at Commerzbank and Munich Re remained rather muted.

New losses in Asia

Investors in Asia had previously taken out cover. The Nikkei lost 1.5 percent to 21,603 points, the Chinese CSI 300 fell by 1.4 percent to 3,667 points. Bad news came from the Chinese economy. Exports from slipped surprisingly sharply by 2.7 percent in April compared with the same month last year, according to the customs authorities in Beijing. While few pessimists had assumed an even stronger minus, the majority of analysts had expected a plus of 2.3 percent. Should the new US punitive tariffs take effect from Friday, this should probably cost further percentage points of export growth.

Minus in New York

Of course, the threat of the deal bursting had also caused fears on Wall Street. The Dow Jones Industrial lost 1.8 percent to 25,965 points at the closing bell on Tuesday. The collective index S&P 500 slipped by 1.7 percent to 2884 places and the high-tech index Nasdaq 100 fell by around 2 percent to 7640 points.

Oil tension

Meanwhile, the tension in the oil market is also rising. The Mullah regime in Tehran announced that it would withdraw parts of the international nuclear treaty. Effective immediately, the country will enrich uranium again. Iranian President Hassan Rouhani gave the European Union an ultimatum: the EU must decide within 60 days whether to follow America or resume oil trade with Iran. At the same time, US Secretary of State Mike Pompeo warned against an “imminent” attack by Iran. Yesterday he surprisingly travelled to Baghdad and demanded that the Iraqi government “adequately protect Americans in their country”. So is Iran threatening to attack American soldiers here? The reaction would be devastating for the Islamists in Tehran – and also for the worldwide oil trade in the bottleneck of the Strait of Hormuz. So will fresh Iranian oil reach the world market because the EU is collapsing? Or will the situation even escalate into war, which could catapult the oil price to new heights? Let us wait and see.

Todays agenda

This Wednesday again there are rather few important dates on the calendar. At 1.30 p.m. it becomes interesting for foreign exchange and bond traders, as the European Central Bank publishes its report on monetary policy. ECB President Mario Draghi will explain the line of the currency guardians as usual.
At 16.30 German time the weekly oil report of the American Energy Information Agency will follow.
All important data can be found here: Market Mover
The Bernstein Bank wishes you successful trades – but please with a professional broker with Bafin license!

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.

07.05.2019 – Daily report. After the downward slide at the beginning of the week, the DAX also commuted a bit downwards on Tuesday morning. Bad news for the bulls: German equities are hovering slightly above the 50-day moving average. In addition, the US futures also showed themselves into the red. If you trade CFDs, you must therefore keep an eye on market updates on a regular basis – you must constantly reckon with bad news.

Customs dispute brings heavy volatility

The stock market is so close to the spoilage: what initially caused howling and gnashing of teeth was quickly reinterpreted. This is what happened on Monday: After a violent early crash on Wall Street, shares in New York caught up with some losses until the end. Analysts had interpreted the new punitive tariffs threatened by US President Donald Trump as a whip for the Chinese in the negotiations. In addition, the suspicion paved the way that Trump had started his threatening manoeuvre because the US indices had reached their all-time highs. CNBC also reported that the Chinese delegation of about 100 men will now travel to Washington on Thursday after all. One day later than planned, but at least. So everything is half as wild? At any rate, the stock exchanges do not rate the talks as having yet broken down.
And then the fear set in again that the US futures slid south again on Tuesday morning. According to the financial portal Marketwatch, US Treasury Secretary Steven Mnuchin had stressed that the new special duties announced by Trump would take effect on Friday without delay at 12:01pm Eastern Time. How can an agreement be reached in such a short time? In front of journalists, the US administration also revealed details about its harder course: China had tried to wriggle out of some already negotiated formulations. Ultimately, then, that would be a breach of speech – whether this rift can be repaired?

New Interim Reports

These were tough times for the DAX, which initially remained robust on Tuesday but then plunged by around 0.5 percent. Four DAX companies provided some distraction during the reporting season. The profits of the Vonovia real estate group rose sharply in the first quarter. The chip manufacturer Infineon performed somewhat better than expected between January and the end of March. BMW slipped into the red due to a provision of billions for a threatened antitrust fine by the European Union. And at Henkel, Henkel’s adjusted operating profit was slightly higher than forecast.

The 50-day line lures from below

But unfortunately there is no all-clear for the bulls: The DAX still hovers quite far above the 50-day line, which runs at around 11,794 points and is considered important support for chart analysts. This makes it an almost magical attraction for the DAX during bear markets. And while we are chatting so nicely about the chart technique: The Dow Jones stopped pretty much exactly at the 50-day moving average during its small slide on Monday and then recovered again. The Dow finally left trading with only a small minus of 0.3 percent at 26,438 points. The market-wide S&P 500 lost 0.5 percent to 2932 points at the end of trading and the technology-heavy Nasdaq 100 lost 0.7 percent to 7794 points. Both indices are still well above the 50-day average.

Nervous flutter in Asia

The view to the east remains, where valerian was highly valued by plagued stockbrokers. The news that China’s deputy prime minister and leading negotiator Liu Hen will also participate in the customs negotiations on Thursday and Friday in Washington provided initial confidence. The whole thing will probably not be a show event. In Tokyo, the Nikkei bid farewell on Tuesday with a minus of 1.5 percent at 21,924 points. However, this was the first trading day in the course of the Golden Week at the change of throne. The Shanghai composite even recovered by 0.7 percent to 2,926 percent. On Monday, the Chinese stock exchange had suffered the strongest losses for more than three years.

This is what the day brings

This brings us to the outlook. Apart from the customs dispute, there are hardly any major events planned. The US consumer loans, for example, are scheduled for March and are due to arrive at 9 p.m. German time. We wish you a healthy portion of coolness and 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.

06.05.2019 – Daily report. Cold shower for all optimists in the matter of customs disputes: US President Donald Trump apparently loses patience with Beijing. He showed the communist rulers the tools of torture: if the Chinese don’t move in the negotiations, the punitive tariffs are to be increased on Friday. The German stock exchange and global trade react shocked.

Minus in Frankfurt – Crash in Asia

Small sell-off at the beginning of the week: The DAX fell by a good two percent in early Monday trading. On Friday, the leading index reached its highest level since the end of September at 12,436 points. Now all stocks except E.ON were in red on the trading platform. Oil prices also fell. In a bloodbath for the bulls, the Chinese CSI 300 fell by 5.5 percent to 3,685 positions. The Shanghai Stock Exchange lost 5.6 percent to 2,906 points and Hang Seng fell 2.9 percent to 29,210 points.

Trump loses patience with China

On Sunday, the US president was visibly angry about China, which wants to renegotiate the customs dispute. “No! had tweeted Trump and announced that on Friday customs duties for Chinese imports of goods worth 200 billion dollars would be increased from 10 to 25 percent. Further goods worth 325 billion dollars would remain untaxed for the time being, but soon tariffs of 25 percent would also be introduced here, Trump tweeted further. The US president stressed that the import duties paid by China so far had had a positive effect on the US treasury.
This Wednesday the Chinese negotiator, Vice Prime Minister Liu He, was supposed to arrive in Washington for new talks. That seems questionable. “China should not negotiate with a pistol on its head,” the Wall Street Journal quoted an insider.

Staying calm is the first trader obligation

As one would expect, the majority of the media have hysterically entered the doomsday mode – apparently global trade is about to collapse, and President Trump is often described as somehow incompetent. Professional CFD traders should be calm in their analysis of the situation. The fact is that volatility has risen sharply. But it had reached unnaturally low levels in recent weeks anyway, as the VIX and the VDAX showed.
Perhaps the latest threat was just a volte-face to discipline China. Maybe new punitive tariffs will actually come. So what? US corporations and Chinese companies that focus on their home market will benefit; export-oriented companies in the US and China will suffer. But the now talked about crisis for world trade does not have to come.
Otherwise, the US President will consistently keep his election promise to protect the domestic industry from unfair dumping competition. Just as Vladimir Putin has been doing for years in Russia, where in the face of horrendously high import duties for vehicles, international car manufacturers have flooded the country en masse, built factories and thousands of Russians have been trained as qualified skilled workers. What, you don’t know that wonderful St. Petersburg has become the Detroit of the North? Our media probably didn’t have the capacity for critical reporting on protectionism at the time.

Threatening storm on Wall Street

The fact is that the stock market will settle down again under turbulence, punish the losers of the new situation and reward the winners. Needless to say, the tariff dispute on Monday will also affect Wall Street. Especially as other important economic data is not on the agenda. All major indices should now test the 50-day and 200-day lines above which they have hovered for weeks.
By the way, the US indices had a nice run on Friday. The leading US index Dow Jones Industrial went into the weekend with a plus of 0.8 percent at 26,505 points. The S&P 500 gained around 1 percent to 2946 points and the Nasdaq 100 advanced 1.6 percent to 7846 points.
So Monday’s motto is: Stay cool when weak hands are shaken out of the market and react quickly with CFDs. 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.

03.05.2019 – Daily report. The stock market in Frankfurt is developing a life of its own: Although Wall Street had reset on Thursday, Germany’s leading index is still close to its high for the year on Friday. Investors are once again analysing incoming interim reports. Meanwhile, interesting events are taking place in the energy market.

DAX close to annual high

A small surprise on Friday morning: While global trading was more bearish, the German stock market is proving to be quite resilient. The DAX reached 12,395 points. On Thursday, the index reached a new annual high of 12,403 points. However, there was not really much energy in trading on Friday. In Japan and China, the stock market remained closed, so there was a lack of impetus from here.
The sporting run of Adidas provided applause – the share climbed to a record high of 246.50 euros on Friday. In the first quarter, the sporting goods group increased its sales by four percent to around 5.9 billion Euro. The operating result even rose by 17 percent to 875 million EUR, significantly exceeding analysts’ expectations. The same applies to net profit, which rose by 16 percent to 631 million Euro. By contrast, BASF’s earnings before interest and taxes fell by 24 percent to 1.7 billion euros in the first quarter. And this despite sales increasing by three percent to 16.2 billion euros.

Losses in New York

Wall Street had reset on Thursday, with the Dow Jones Index falling by 0.5 percent to 26,308 points. The broader S&P 500 lost 0.2 percent to 2,917 points and the high-tech Nasdaq 100 index fell 0.4 percent to 7,724 points. The oil stocks had caused a sensation: a small slide in the price of oil had burdened ExxonMobil or Chevron.

New record for US oil production

The reason for this development is that oil production in the USA has reached a new record level. In the week ending April 26, the USA had reached a record of 12.3 million barrels per day according to data from the Energy Information Agency. No wonder stocks in the United States reached their highest level since September 2017. Russia also put oil prices under pressure: according to official data, production fell from 11.3 to 11.23 million barrels per day from March to April; however, the target promised in the course of the OPEC production reduction was 11.19 million barrels per day.

Iran remains in sight

Meanwhile, Washington apparently continues to tighten its screws against Iran: According to the Wall Street Journal, the US wants to cut the mullah regime off from the flow of much-needed dollar foreign exchange through a more aggressive application of sanctions. The paper cited Iranian exports of petrochemicals to Singapore and the sale of consumer goods to Afghanistan as concrete targets.
Yesterday, Thursday, the U.S. dropped the last exemptions in the sanctions against countries trading with Iran. This threatens the complete collapse of Iranian oil production on the world market, whose supply has already fallen as a result of the collapse of Venezuela, which is in socialist ruins. Saudi Arabia, together with other allies, however, wants to absorb the loss. We are eagerly awaiting the further development of crude oil.

Waiting for US data

In the afternoon, CFD traders should keep an eye on the regular market updates on their trading platform – from 14:30, volatility could increase rapidly. This is when the April Labour Market Report will be released. Bulls are hoping for a further increase in employment. A too strong increase in incomes could, however, call the Federal Reserve into action with interest rate hikes, as this would fuel the danger of inflation.
The Markit Purchasing Managers’ Index for Services will follow at 15:45 German time.
And at 4 p.m. the ISM Purchasing Managers’ Index for the nonmanufacturing sector is reported. Unlike Markit, the Institute for Supply Management does not only survey private companies.
All forecasts and scheduled economic data are available here: Market Mover
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.

02.05.2019 – Special report. The balance sheet season is continuing briskly and yet the German retail sector in Frankfurt has recently lacked momentum. Some brokers referred to the statements of the Federal Reserve from the previous evening. However, the US Federal Reserve only acted as expected and once again pleaded for a wait and see. Asia lacked a tailwind due to public holidays. Perhaps new economic data will bring some movement in the afternoon.

Fresh figures in Frankfurt

With slight oscillations, the DAX moved sideways on Thursday morning. At 44.4, the German industrial purchasing managers’ index was just below the forecast of 44.5. Some quarterly figures also arrived on the trading platform of the stock market.
Volkswagen shares remained at the top of the index. Operating profit did not fall as sharply in the first quarter as some of its competitors, and the figures also met forecasts. Sales rose surprisingly sharply by three percent to 60 billion euros. Fresenius and FMC developed unobtrusively. Both companies exceeded analysts’ expectations for their operating result and confirmed their forecasts. At the end of the DAX, Munich Re was quoted, the share is traded ex dividend.

Interest rate decision in London

Forex trading enthusiasts should keep an eye on the regular market updates to the British pound early in the afternoon. The Bank of England’s interest rate decision is due at 1 p.m. German time. Hardly any analyst expects the currency guardians in London to lay hands on the key interest rate of 0.75 percent before a final Brexit decision. You can see all scheduled events here by scrolling down: Market Mover

Public holidays in Asia

The major stock exchanges in Asia remained closed on Thursday. In Japan, investors are pleased to take a break from the coronation of the new emperor. And in the People’s Republic of China, today and tomorrow, the Labour Day will be celebrated extensively. After all, trading took place in Hong Kong: Hang Seng closed with a plus of 0.8 percent at 29,944 points.

Setbacks in New York

There was a backstop on Wall Street yesterday. Real-time prices slipped immediately as Jerome Powell disappointed the hopes of some stock markets for a rate cut. The head of the Federal Reserve once again stressed the Fed’s current patience in adjusting interest rates. US President Donald Trump had only called for interest rates to be lowered on Tuesday.
The Dow Jones index lost 0.6 percent to 26,430 points at the closing bell on Wednesday. In April, by the way, the US leading index had gained 2.6 percent; since the beginning of the year, after four months, the increase has already reached 13 percent. The broad-based S&P 500 lost 0.8 percent to 2,923 points on Wednesday. In early trading, the index reached a new record high of around 2,954 points. The Nasdaq 100 lost 0.4 percent to 7752 points.
Incoming economic data were mixed. Employment in the US private sector surprised in April with the strongest growth since July 2018. By contrast, the mood in US industry had surprisingly slipped to its lowest level since October 2016. However, the overall index remains above the threshold of 50 points, signaling growing industrial production.

Apple convinces investors

Apple caused a sensation: the Group’s profit in the second quarter ended at the end of March fell by around 16 percent year-on-year to 11.6 billion dollars. However, the situation had improved by the end of the quarter. In addition, the iPhone manufacturer forecast higher revenues for the current quarter than analysts had expected. In addition, the high-tech group emphasized that its sales in China are stabilizing. Apple is also planning an additional 75 billion dollars for share buybacks and the dividend is to be increased by five percent.

This is what the day brings

As for today’s Thursday, economic data is likely to be the main driver of price movements. At 2.30 p.m. German time, the figures for productivity in the USA are expected to arrive in the first quarter, as well as the weekly initial applications for unemployment benefits. At 4:00 p.m., the order intake for the US industry is scheduled for March.
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.

30.04.2019 – Special report. Once again, the DAX hovered just below the price peak at the start of trading. Wall Street had set closing records for Nasdaq Composite and S&P 500 the previous day. However, many brokers held back because of important US economic data. Since there are still around 160 companies outstanding in the S&P, which are reporting their balance sheets this week. On top of this, there is still the Federal Reserve’s report tomorrow which always has everyone watching.

Balance sheet season in full swing

We already know the pattern: The morning in Frankfurt is marked by a small backset. The DAX, for example, recently recorded a minimal minus, but over 12,300 points. The day before, Germany’s leading index had only started at 12,366 points, its highest level since the end of September, before it crumbled. After all, the DAX was close to its high for the year on Tuesday.
Investors had to process a lot of business results. According to the interim report, the Lufthansa share trundled into the lower DAX regions: In the first quarter, the airline felt the effects of overcapacity and massive price pressure, and the loss widened. Beiersdorf was at the top of the DAX, with sales better than expected. Deutsche Börse held its ground slightly higher, and earnings in the first quarter rose surprisingly significantly.

Skepticism about China’s industry

Mixed data had arrived from China in the morning. On the one hand, the state purchasing managers’ index for industry slipped below forecasts. The forecasts for service providers were also slightly undercut. But on the other hand, the industry index of the magazine “Caixin” was better than expected. However, the private indicator slipped from 50.8 points in the previous month to 50.2. Industrial activity is therefore still expansionary, albeit weaker than before. All the important dates and data figures can be found here: Market Mover
Investors in China probably saw the data as an argument for increased state intervention, with the CSI 300 gaining 0.3 percent to 3,913 points. The Tokyo Stock Exchange will once again be closed today because of a public holiday.

Records on Wall Street

On Monday evening, new records had fallen rather inconspicuously on Wall Street. The financial professionals of Marketwatch judged: The S&P 500 finally rose by 0.1 percent to 2,943 points, setting the record on September 21st intraday, a positive signal for chartists. The Nasdaq Composite rose by 0.2 percent to 8,162 positions. According to Marketwatch, both the S&P 500 and the Nasdaq Composite achieved record highs twice in a row, the first time since the four-day route ended on August 29, 2018. Let’s remember: The rally lost some of its strength quite soon after, but it was a hard-downhill race until Christmas. The rest of the balance season will show how things are going this time.
The Dow Jones Industrial Average closed almost unchanged at 26,554 positions on Monday. There were also mixed data in the USA: US consumers had indeed increased their spending in March. Inflation was moderate. However, household incomes gave households food for thought.
The Google mother Alphabet had a damper on the bulls after the close of trading. Growth is flattening out, and there was also a sharp drop in profits in the first quarter.

This is what the day brings

The calendar on Tuesday is full to bursting with economic data: German consumer prices are due for April at 02:00 p.m.
The index for employment costs in the first quarter from the USA is expected to arrive at 02:30p.m German time.
The Case-Shiller-Index will follow at 03:00 p.m. and will provide insight into the price development on the US real estate market.
Finally, at 04:00 o’clock this evening the pending house sales are lining up in March and above all the consumer confidence for April.
During the balance sheet season, investors will be looking at General Motors at 01:30 pm and McDonald’s at 02:00 pm. At 10:30 tonight the Apple numbers set an important final chord.
At the same time the crude oil inventory data of the private American Petroleum Institute (API) are to run over the screens.
So once again the day for CFD traders is richly filled – 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.

29.04.2019 – Special report. The Turkish central bank has apparently abandoned the support of the Turkish lira. Now it’s getting exciting for friends of technical analysis: USDTYR and EURTYR are showing signs of a cup formation. But those who are dead live longer if, for example, international allies lend Ankara fresh foreign exchange. Reason enough for an update on our Special Report from early of this month.

The Lira Weakens Again

Told you so: In our special report on the Turkish local elections at the end of March, we pointed out that Turkey might soon have to stop supporting its domestic lira. Since then, the currency has lost almost ten percent against the euro and the dollar. With the dollar, the lira is again close to the magic mark of 6 lira. This could only have been the beginning.

Is this the beginning of the capitulation?

The Turkish central bank (Türkiye Cumhuriyet Merkez Bankasi – TCMB) in its press release of 25 April on the key interest rate decision, according to the financial blog ZeroHedge, has refrained from a reaffirmation that it had always used before, according to which it would use “additional tightening” if necessary, i.e. could raise interest rates even further. Incidentally, the key interest rate remained unchanged at a staggering 24 percent. However, many analysts had just expected a warning about a possible further hike to support the currency.
It seems that Turkey can’t get a grasp on the fight against inflation. At around 20 percent, inflation is four times the monetary policy target. Here the Monetary Policy Committee has smoothed its language in the “forward guidance” and shown little determination.
According to ZeroHedge, investment bankers interpreted the recent development as the capitulation of the hawks in an attempt to support the Turkish exchange rate. The blog quoted Win Thin, the head of the global foreign exchange strategy of the US private bank Brown Brothers Harriman, as saying that the development in Turkey was far worse than expected – no central bank in the world could switch to the doves in times like these.

No more ammunition

Ankara is out of gunpowder, according to the news agency Bloomberg, the support of the lira cost Turkey between 10 and 15 billion dollars at the end of March alone. The “Financial Times” reported that TCMB’s foreign exchange reserves alone fell by 1.8 billion dollars last week. All this looks like a Waterloo for long investors in the lira.
We are curious whether allies like Russia will intervene to support the lira. Moscow and Ankara announced on 9th April the creation of a joint investment fund to be filled with the equivalent of 900 million euros. The caskets of the sheikhs in Qatar are also full to bursting.

Parallels to Russia

Now the Turkish government will probably soon start murmuring again about dark powers speculating against the domestic currency. But that is nonsense. A currency is always strong when investors flow into the country and exchange dollars or euros for local currencies to pay salaries locally and build factories. And when they flee in masses, then the national currency just disappears. Moreover, a currency always weakens when the estimated government instructs the not so independent central bank to print money to pay pensions, wages for soldiers or civil servants’ salaries.
The Russians can sing a song about it – at the turn of the millennium they only had to put 23 rubles on the counter of exchange offices for one euro when investors such as Ikea, international car companies or supermarket chains such as Carrefour or Metro discovered Russia. Then reports of corruption and bureaucratic obstacles became more frequent, the fight against Islamist terror in Chechnya cost a lot of money, and the price of oil fell again. In short, the economy weakened and the ruble crashed. At the peak of 2016 the figure was 89, currently it is 72 rubles per euro. You can imagine the joy of the Russian middle class at the loss of purchasing power from their savings, which is why real estate and gold are traditionally in high demand in the Russian Federation. The situation is hardly any different in Turkey, where military intervention in Syria has burdened the state budget and tourism has suffered as a result of the flow of refugees.

Cup with a handle

Meanwhile, chartists are watching as to whether the EURTYR and USDTYR might not form a gigantic cup-with-handle formation over the year, which would mean the lira falling into the bottomless if a breakout occurs. The upper left edge of the cup would therefore have formed in August 2018, the bottom this January.

So: No country in the world can forever support its own currency if the real economy is ailing. But: A crash does not have to happen, going long or short here, as so often, a question of politics. For example, the Turkish central bank could surprise investors and raise the key interest rate without warning. Or unexpectedly mobilise new currency reserves. Ankara must prevent a wave of bank and company bankruptcies, as many market players have gone into debt in dollars. A deep recession cannot be allowed by the government under any circumstances.
We are curious to see what happens next, the Bernstein Bank wishes you successful day with your trades. But please only with Germany’s best CFD brokers with a Bafin license!

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.

29.04.2019 – Daily report. Quietly the lake rests at the stock exchange. Brokers in Frankfurt were visibly restrained at the beginning of the week, with little activity on the trading platform. No wonder: Most investors are currently waiting for the Federal Reserve’s midweek speech. And on the progress of the customs negotiations between China and the USA.

DAX slips slightly

At the start of the week, Germany’s leading index fell by 0.4 percent to 12,269 points. On Wednesday last week, the DAX climbed to 12,350 points, its highest level since the beginning of October 2018. In the reporting season, Covestro spoke with balance sheets. As expected by most analysts, the plastics group faced tougher competition and price declines in the first quarter. Bayer and Continental traded ex-dividend at the beginning of the week.

Investors wait for the Fed

There should be little movement in global trading ahead of the Federal Reserve’s upcoming speech. Especially as the middle of the week is a public holiday on Labor Day. The Fed will close its two-day monetary policy session on Wednesday. Analysts do not expect the Federal Reserve to change its key rate between 2.25 and 2.5 percent.

Do or die in the customs dispute

There was a small amount of news in the customs dispute between China and the USA. According to US Treasury Secretary Steven Mnuchin, the negotiations have entered the decisive final round. Both sides want an agreement, there is good progress, he told the New York Times. However, the US politician immediately dampened the euphoria: The talks had now reached a stage where there was either an agreement – or no deal. The next round of talks is to start tomorrow in Beijing.

Good mood in China

In China, positive data from the industrial sector created a buying mood: After four consecutive declines, corporate profits had risen again in March. According to the state statistics office, the increase was 13.9 percent compared to the same month last year. This is the strongest increase since July 2018. In January and February of this year there had been a minus of 14 percent. The CSI 300 rose by 0.3 percent to 3,900 points. There was no trading in Japan because of the current Golden Week.

Robust US economy

Strong economic data from the USA also arrived on Friday. According to the data, the American economy grew faster than expected in the first quarter. Inflation has also risen only moderately. All data can be found here: Market Mover
On Wall Street, Nasdaq Composite and S&P 500 were in record regions. The Dow Jones Industrial closed Friday up 0.3 percent to 26,543 points. However, for the week as a whole, the index was on the spot. The market-wide S&P 500 advanced by 0.5 percent to 2940 points. Intel caused disappointment with a profit warning. The Nasdaq 100 rose by only 0.1 percent to 7,827 points.

Trump admonishes OPEC

Interesting things also happened on the energy market. US President Donald Trump on Friday called on the OPEC cartel to increase oil production due to rising oil prices. He had spoken with Saudi Arabia and other producers, Trump had tweeted that everyone was in agreement.

Goldman sees lira low

Goldman Sachs has also taken the floor in line with our latest special report on Turkey. The investment bank referred to the interest rate decision of the Turkish central bank last week, whose commentary lacked any previously shown determination to defend the domestic currency. Goldman Sachs now sees an all-time low of 7 lira against the dollar over the next twelve months. USDTYR was last quoted at 5.94. At the local elections at the end of March, the lira had still stood at 5.48. The USDTYR had been at 5.48 for the last time. The melting of the lira should boost demand for gold in Turkey. Here, too, Goldman Sachs issued a statement. The investment bank stressed that central banks are currently buying a lot of gold. This is a factor for a return of over 1,300 dollars per ounce.

This is what the day brings

On Monday’s agenda at 02:30 p.m. German time is mainly personal expenses and income in the USA in March.
For traders who are interested in government bonds, it could be exciting at 03:45 p.m. when the European Central Bank announces the weekly change in the Eurosystem central banks’ holdings of government bonds, covered bonds, corporate bonds and asset-backed securities.
Bernstein Bank wishes you a very successful day 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.