News

09.04.2019 – Daily report. Global stock trading is waiting. On the one hand, there is nothing new about the China-USA customs dispute. Rather, the conflict with the EU is now boiling up. On top of that, the Brexit is struggling. Furthermore, there are currently few interesting economic data available. A real directional decision for Wall Street will only come in the reporting season. Thus, the DAX is shimmying just under 12,000 points.

DAX moving sideways

Lead time on the stock exchange: Recently there was hardly any movement in real-time prices on the trading platform. The German benchmark index moved slightly lower in early Tuesday trading. In this market, at best CFD traders can earn a little money, thanks to the leverage. Brokers are waiting for interesting news. However, there were few of them.

Positive news in short supply

According to the Chinese television channel CCTV, the US and China have made further progress in their recent trade talks. Negotiations are expected to continue this week. That was it.
A report on the customs dispute with the EU caused restraint: Washington is targeting the European aircraft manufacturer Airbus because of the subsidies. The US administration published a list of products that could be subject to tariffs in retaliation – including commercial aircraft, aircraft components, dairy products and wine.
Scepticism prevails in the constant misery surrounding the Brexit. The danger of Britain’s chaotic exit from the EU this Friday has still not been averted. We are eagerly awaiting the upcoming Brexit summit. After all, the pound sterling has so far accepted all the capers in a largely stable and calm manner.

Asia and New York undecided

Investors in Frankfurt received no real impulses from overseas. The Nikkei 225 closed 0.2 percent higher at 21,803 points. The CSI 300 went unchanged at 4,059 points out of the day.

Wall Street had already closed on Monday evening without a clear trend. The Dow Jones lost 0.3 percent to 26,341 points. The Boeing share, which is strongly weighted in the Dow, once again made negative headlines. Here, the reduction in production of the 737 MAX pulled the price down. Also according to a report of the “South China Morning Post” the China Aircraft Leasing (CALC) put the orders for the breakdown plane on ice after two crashes of a 737 Max and various flight bans.
For the S&P 500, it went up a minimum of 0.1 percent to 2896 points. The high-tech stocks in the Nasdaq 100 recorded a profit of 0.3 percent to around 7600 positions. Data from US industry turned out as expected: Order intake in February was down 0.5 percent on the previous month.

This is what the day brings

The Tuesday deadline situation looks rather sparse. At 3 p.m. German time, the World Bank and the International Monetary Fund will present their views in the World Economic Outlook at their spring meeting.
Late in the evening at 22.30 the American Petroleum Institute reports its inventory data for crude oil stocks.
The Bernstein Bank wishes you a successful day trading!

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.

08.04.2019 – Special report. We already know that: The Saudis supposedly just warned the USA of anti-cartel legislation again. Riyadh will drop the dollar if the NOPEC Act is passed. Most brokers will probably only shrug their shoulders. But what if this time the conflict actually escalates – and petrodollars are used as a weapon in an economic war? We will shed light on the background.

There is always a first time

Perhaps it will turn out as always: NOPEC is prevented, the USA reaches an agreement with the OPEC states and their supporters. They don’t drive the oil price too high to keep the US economy and the global economy from being stalled. But perhaps this time a black swan will actually land on the floor. Reason enough for the Bernstein Bank to devote itself to this smoldering crisis.

Petrodollars as a nuclear option

It is clear that the mood between the USA and the Saudis has deteriorated continuously. Last week, Reuters reported the following, citing unnamed people from Saudi energy policy: Saudi Arabia had threatened to let the dollar fall. In the future, the country could sell its oil for other currencies as well if OPEC became the target of American anti-trust legislation. Riyadh discussed the plan with other OPEC states and communicated it to the American authorities. The Saudis knew that they could use the dollar as a “nuclear option”. If NOPEC were adopted, the US economy would fall apart.

Fear of NOPEC

NOPEC – specifically: No Oil Producing and Exporting Cartels Act – is a kind of political zombie that has been wandering around for quite some time, but has neither been finally killed nor really brought to life. The bill was first discussed in 2000. According to him, OPEC states and their supporters in the US could be charged with antitrust violations, which could result in detention and expropriation. So NOPEC is not yet a law. Nonetheless, the act under Donald Trump and an insubordinate Congress has gained momentum: Trump has not yet spoken out in favor of it as president, but in a book from 2011 he supported it. However, US Energy Secretary Rick Perry has already warned that NOPEC will have undesirable consequences.

US Treasuries as a weapon

The issue of government bonds is also becoming more explosive because of NOPEC. About three years ago, the Saudis had already rattled their treasury sabers for the first time: The New York Times reported that Riyadh would throw US government bonds worth hundreds of billions of dollars onto the market. This would happen if Congress passed a law according to which the Saudi government could be held responsible before US courts for the attacks of 11 September 2001.
Since 2004, according to the financial blog “ZeroHedge”, the Saudis have increased their holdings of US Treasuries from virtually zero to currently around 167 billion dollars. The figures were supported by “Asharq Al-Awsat”, one of the largest Arab daily newspapers: Saudi Arabia held US Treasuries worth around 165 billion dollars until August 2018. The United Arab Emirates had it worth around 60 billion dollars. Kuwait came to 43 billion dollars.
Remains Russia. According to the Russian medium “RT”, the Kremlin reduced its stock of US Treasuries from around 97 billion to 13 billion by last November and bought more gold. The influence of Moscow is therefore still small. Venezuela and Iran, which do not sell oil for dollars, make no big difference either.

De-Dollarization and Petro-Yuan

But an affront by Saudi Arabia and the other Arab US allies would be a significant signal in the de-dollarization process. This could trigger a process in which investors worldwide assume a crash of the dollar and treasuries and thus reinforce it. The leading global holders of American bonds are still China and Japan, both of which have already reduced their holdings: The People’s Republic still holds about 1,200 billion US dollars, Japan about 1,000 billion.
Since OPEC is also likely to curb production in the course of a dispute, CFD traders should also keep an eye on commodities. In addition, there are already attempts to establish another currency in oil trading: The yuan. Investors should not ignore it either.

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.

08.04.2019 – Daily report. Little stopper for the stock market cops: Bad news from the German economy and the automotive industry slowed down the DAX in early Monday trading. The leading index remained slightly below the 12,000 mark. Brokers in Frankfurt are waiting for new boost from upcoming data by the USA.

Again and again fear of the economy

German exports fell more sharply in February than at any time in a year due to the weaker global economy. Exports slipped by 1.3 percent compared to the previous month, as reported by the Federal Statistical Office on Monday. Most analysts had only forecast a minus of 0.5 percent. “The air is out,” commented Volker Treier, head of foreign trade at the German Chamber of Industry and Commerce (DIHK). ” There is little hope that this will change in the coming months. “

Car manufacturers in the EU’s sights

The EU Commission suspects BMW, Daimler and VW of violating European antitrust law. Even if these were not price agreements, the car manufacturers would have avoided competition by reducing exhaust emissions through agreements. They had thereby denied consumers the opportunity to buy more environmentally friendly vehicles.

Mixed signals from overseas

In Asia, investors had shown little buying mood in the morning. In Tokyo, the Nikkei closed 0.2 percent lower at 21,772 points. The CSI 300 also fell by 0.4 percent to 4,044 points.
Prior to this, Wall Street had provided a moderate tailwind. The Dow Jones closed with a slight gain of around 0.2 percent to 26,425 points. Thus achieved a gain of 1.9 per cent in the previous week. Now the Dow is only a good 500 points below its peak at the beginning of October 2018. The market-wide S&P 500 had left trading on Friday with a gain of 0.5 percent at 2893 points. And the Nasdaq 100 went into the weekend with a plus of 0.5 percent at 7579 points.
The rise was driven by strong data from the US labor market: 196,000 new jobs were created outside agriculture in March. Analysts had expected an average of only 177,000 new jobs. The unemployment rate remained at 3.8 percent.

Oil boom continues

However, the question arises as to whether the oil price is not dampening hopes of an economic upturn. Oil has climbed to its highest level in five months. The main reason for this is the curtailment of production in the OPEC states and the allied export countries. In addition, the US sanctions against Iran and Venezuela are scaling back supply.

This is what the day brings

Now the stock market is looking at the order intake for the US industry, which is to be reported today, Monday, at 16.00 hrs.
It is questionable whether the stock market will take a large position before the start of the reporting season. The big bank JPMorgan Chase will make the start among the blue chips on Friday before the opening of the stock exchange.
Today at least Sears gives a first taste of the situation in the retail sector.
Meanwhile the market researchers of Data Trek Research warned in their interview with CNBC against gruesome quarterly figures. At present, expectations for the results are minus 3.9 percent – the first negative three months since the second quarter of 2016.
So let’s wait and see – Bernstein Bank wishes you good 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.

05.04.2019 – Daily report. First, sit back and relax: After the new annual high on Thursday, investors at the Frankfurt Stock Exchange are taking it easy on Friday morning. In the afternoon, the important labour market data from the USA is due. These will potentially move the US futures and also the DAX strongly. The stock market has received support from US President Donald Trump: He described an agreement in the US trade dispute with China within four weeks as possible. Now he and the leadership in Beijing must deliver.

DAX commutes below 12,000

Lethargy in Frankfurt: The DAX stabilized at just under 12,000 points on Friday morning with slight losses. Real-time prices on the trading platform have been flashing sluggishly recently – movement was frowned upon, rest was the order of the day. No wonder: on Thursday, the leading index had crossed the 12,000 mark again for the first time since the beginning of October. Specifically, the DAX reached 12,029 points.

Economy versus chart technology

Positive news from the German economy provided support on Friday. Companies in Germany increased their production in February despite falling orders in industry. Industry, construction and energy suppliers together produced 0.7 percent more than in the previous month, according to the Federal Ministry of Economics.
Two facts, however, are causing frowning among friends of technical and chart analysis with regard to the DAX: On the one hand, the most recent increase was accompanied only by low sales. This means that the plus only rests on a few shoulders. If they change their minds, things can quickly go downhill. On the other hand we have in the candle daily Chart of the past five days now already two Gaps. Price gaps are usually closed, the question is when. So the food for the bears is ready.

Hope for a deal in the customs dispute

Most brokers, however, were optimistic recently: in light of the hoped-for end to the customs dispute between the USA and China in the near future, the general mood is positive. Trump had announced yesterday that the USA and the People’s Republic are well on their way to a “great agreement”. China’s Deputy Prime Minister Liu He also spoke of great progress. The optimism in the White House also infected investors in Japan: The Nikkei index rose by 0.3 percent to 21,793 points on Friday. The stock exchanges in China remained closed due to a holiday.

Profits on Wall Street

The most recent winning streak in New York continued on Thursday as a result of the hoped-for China deal. In addition, the US labor market remains robust. The number of first weekly applications for unemployment benefits has fallen to its lowest level in almost 50 years. It is no wonder that the Dow Jones recorded a gain of 0.6 percent at 26,385 points at the closing bell. This is the highest level since the beginning of October. The S&P 500 rose by 0.2 percent to 2879 points. Only the Nasdaq 100 fell by around 0.1 percent to 7541 points.

US job data in focus

The best always comes at the end: The highlight of the Börsenwoche on Friday afternoon will be the US labour market report for the month of March. At 14.30 it will be really exciting. The forecasts are for a plus of 176,000 new non-agricultural jobs. Any disappointment should rekindle fears of the recession. Each overfulfillment might lend new Kraft to the bulls. The Bernstein Bank hopes that you will place your CFD trades on the right side!

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.

04.04.2019 – Daily report. Short descent after the high-altitude flight: The DAX has turned a little to the south in the morning session on Thursday. After the new annual high of the previous day, unpleasant news from the German economy hung like a stone on the leading index. Perhaps news about the hoped-for deal in the Chinese-American customs dispute will provide new momentum.

DAX commutes over 11,900

The DAX certainly deserves a breather: Germany’s leading index has just reached its highest level since the beginning of October at 11,961 points. Most recently, however, the DAX still held above the 11,900 mark with a minimal loss. A Financial Times report that Italian Unicredit was preparing a takeover bid worth billions for Commerzbank causing a sensation. The financial group would be ready should the merger negotiations between Commerzbank and Deutsche Bank fail.

Decline in orders in the Industry sector

Unexpectedly bad news arrived from ther German industry: In February, it had to accept the sharpest drop in orders for over two years. New business shrank by 4.2 percent compared to the previous month, mainly due to weak demand from abroad, according to the Federal Ministry of Economics. Orders had already fallen by 2.1 percent in January.

Customs dispute over and over again

A buying mood on the stock market could again be fuelled by concrete signals of an agreement in the customs dispute between China and the USA. A meeting between US President Donald Trump and Chinese Deputy Prime Minister Liu He is scheduled for Thursday. The meeting was scheduled for 16:30 local time at the White House.
Yesterday evening, the news that Trump’s economic advisor Larry Kudlow had demonstrated confidence in a solution to the trade dispute brought joy. According to CNBC, he said China had given in to intellectual property theft, forced technology transfer, and cyber security on the top issues. The Financial Times had previously reported that 90 percent of a deal was in dry cloths.
Accordingly, investors in China on Thursday took action: the CSI 300 gained 0.5 percent to 4,042 points. In Japan, brokers were more cautious, and the Nikkei closed unchanged at 21,719 points.

Wall Street slightly up

In New York on Wednesday, the stock market had stocked up on shares in view of the news about the China deal. The Dow Jones Industrial rose by 0.2 percent to 26,218 points. The S&P 500 also gained around 0.2 percent to 2873 points. And the Nasdaq 100 even rose by 0.6 percent to 7545 points.

And this despite the fact that US economic data disappointed: Employment in the private sector, for example, rose surprisingly weakly in March. In the service sector, sentiment had deteriorated more than expected. All economic data can be found here: Market Mover

Here are the events of the day

Now we are eagerly awaiting hopefully soon arriving details of the Chinese-American customs agreement.
Beforehand, the European Central Bank will publish the monetary policy meeting from March 7th at 1:30 pm.
At 2:30 p.m., the brokers are looking anxiously at the US futures, because then the first applications for unemployment benefits will be received.
It will be interesting for friends of the Canadian dollar at 4:00pm: the Ivey Purchasing Managers’ Index for March will then run across the screens.

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.

03.04.2019 – Daily report. Once again news from China pushes prices: The DAX reached a new high for the year on Wednesday morning. The good mood in the Chinese service sector was a boost. On the other hand, according to a press report, an agreement in the customs dispute between China and the USA is imminent.

Strong growth in Frankfurt

The German stock market indicator recorded a plus of over 1 percent in early trading and reached a high of 11,925 points. There was especially one article in the “Financial Times” that was applauded by the brokers: According to it, most of the details in the US-Chinese customs dispute have been resolved. The question of how already introduced US customs duties on Chinese products can be lifted remains open. All in all, however, an agreement is in sight. Both sides are on the verge of concluding an agreement. The FT referred to persons familiar with the state of negotiations.

Service sector in China optimistic

In addition, good economic news from China ran over the screens. After the good news from the industry on Monday that had fired hopes of a turnaround in the People’s Republic, the service sector has now started to recover. The Caixin/Markit purchasing manager index for the service sector climbed to 54.4 points. This is the highest level for 14 months. In February, the index had still marked 51.1 points. The index shows growth above 50 points. The managers signaled higher demand both from China and abroad.

Brokers in Asia in buying mood

No wonder, given the good news, that investors in Asia were accessing. Hopes of an economic recovery for the entire region and the entire world meant that cyclical stocks such as shipowners and machine builders were particularly in demand. The Nikkei closed Wednesday up 0.8 percent to 21,676 points, while the Chinese CSI 300 gained 0.4 percent to 3,986 points.

Before the arrival of the China News, Wall Street had presented itself with no clear tendency. Weak orders for durable goods dampened sentiment. The Dow Jones lost 0.3 percent to 26,179 points at the closing bell on Tuesday. The market-wide S&P 500 bid farewell unchanged in percentage terms at 2867 points. However, the Nasdaq 100 reached its highest level in almost six months. Just below its high, it dropped out of the day with a plus of 0.3 per cent at around 7500 points.

This is what the day brings

The question remains as to whether the stock market players in New York will first cash in on the arrival of the final, official message on the customs agreement between China and the USA. Since the deal has received such advance praise, a sell the news would not be unusual.
However, economic news will also move the prices of stocks and bonds. For example, the ADP Labour Market Report for March in the USA is scheduled to be published at 2.15 p.m.; forecast: 221,000.
The ISM Purchasing Managers’ Index for Services in the USA follows at 16:00. Forecast: 58.7.
And finally, at 4.30 p.m., the US crude oil inventory data from the state Energy Information Administration (EIA) will run on the screens. Forecast: a minus of around 3.4 million barrels.
All important scheduled events can be found here: Market Mover
The 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.

02.04.2019 – Daily report. Investors on the German stock exchange taking a deep breath. After the strong start to the week, they are digesting the profits. The DAX oscillates indecisively. Not many scheduled market-moving news are to be expected today, Tuesday. Nevertheless, you should keep an eye on your regular market updates because of the customs negotiations between China and the USA.

Quiet trading

On such an unspectacular day, professionals at best enjoy using CFDs – because they can earn good money with even the smallest price movements. Global trading has been mostly at a standstill. Many brokers were waiting at the sidelines. In the morning, the DAX was trading largely unchanged at 11,700 points.

DAX hangs below the 200-day line

And there is a good reason for this: Many investors look hypnotized at the 200-day line, which runs slightly down. It is currently hovering at 11,716 points. And behold, the marker acted as a resistance yesterday. If you look at the candles in the day chart, you will see that the ascent ended pretty much at the 200-day line. By the way, the DAX sent out another interesting chart signal with its strong performance yesterday. Between 11,750 and 11,600 gapes a small price gap. This gap could normally be closed again at short notice.

No push from Asia and London

In any case, there were no thrust factors at last. There is no solution to the Brexit dispute. The British Parliament has once again rejected all alternatives to Prime Minister Theresa May’s Brexit deal. Investors in Asia had also waited: The Nikkei closed unchanged at 21,505 points. In China, the CSI300 lost 0.3 percent to 3,962 points. Every half-sentence from the negotiating delegations in the Chinese-U.S. customs dispute can move prices strongly here and on the global financial markets.

Wall Street enormously firm

The New York Stock Exchange presented itself very firmly on Monday. The mood in US industry had surprisingly improved significantly in March. In addition, construction spending in February had risen more strongly than had been hoped for. In the People’s Republic of China, sentiment data had previously been convincing – both from small and medium-sized, mostly private industrial companies as well as from large state-owned corporations. You can read all the data here: https://bernstein-bank.com/de/research/#Market
The Dow Jones closed yesterday 1.3 percent higher at 26,258 points. The S&P 500 climbed by 1.2 percent to 2,867 points. Both indices thus reached their highest level since October 2018. The Nasdaq Composite rose by 1.3 percent to 7,828 points. Here, too, a brief look at the basics of the chart technique: all three indices tore gaps in the chart with yesterday’s movements. You should keep an eye on them. What happens next could be decided at 2.30 p.m. German time: Then the core rate for incoming orders for durable goods will be reported in February; forecast: 0.2 percent.

Oil boom

There remains a short detour to the oil market. Analogous to the world’s stock markets, the oil price has boomed. The price of black gold rose by 33 percent in the first quarter. Parallel to the economic recovery signals from China, the declining number of US oil wells played a role here. And of course OPEC’s cut in production. Tonight at 10.30 p.m., the report of the American Petroleum Institute will provide information about the stocks in the USA. We wish you a very successful day trading!

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.

01.04.2019 – Special report. The regional elections in Turkey have been held, now the financial market is reacting. Ankara has completely destroyed confidence. The question is whether the Turkish central bank must give up the support of the lira. A sell-off seems more than possible. Unless the country on the Bosporus reforms and returns to its former economic strength.

First warning from Moody’s

After the election, the Turkish lira lost only moderately, the question is whether it will stay that way. The rating agency Moody’s fired a warning shot: according to a CNBC report on Monday, the agency complained about the Turkish central bank’s use of the alarmingly shrunken forex reserves to support the lira. The action taken immediately before the regional elections had heightened doubts about the independence of the currency guardians. Moody’s verdict: “Credit Negative”.

Feud against investors

Yesterday’s election on Sunday thus not only brought the autocrat Recep Tayyip Erdogan a lesson – his AKP lost in the capital Ankara for the first time in 25 years. Erdogan has also angered international investors. A week before the local elections he had been raving: “Whoever bets against our currency pays a high price”. Shortly afterwards, the Turkish regulatory and supervisory authority reported that it was investigating several banks investing short in the Turkish lira, including two bankers from JP Morgan in Turkey.

Lira short squeeze

Tuesday last week Turkey finally rode an unprecedented attack on shorts. The overnight swap rate shot up to a horrendous 1338 percent. Lira’s loan thus became unaffordable. Bankers and analysts reported that not a single Turkish lender wanted to lend even one lira. Despite denials by the Turkish banking association, the financial market was assuming an order from Ankara. Brokers spoke of Turkey’s financial suicide. After Thursday last week, the swap rate slipped back to the usual levels of up to 40 percent. The market in London had thawed out and Ankara had to surrender.

Forex reserves burned

Last Thursday, the shock mentioned by Moody’s: the Turkish central bank reported a slide in its holdings of gold and hard currencies to 24.7 billion dollars on 22nd March. The week before, the figure had been 28.5 billion. The lira immediately submerged. The Financial Times suspected that in March alone Turkey burned about a third of its forex holdings to support the lira.
The governor of the Turkish central bank, Murat Cetinkaya, was still trying to smooth the waves. He told state news agency Anadolu that net reserves of foreign currency had risen by $2.4 billion in the last few days of March. The financial blog “ZeroHedge” suspected that this was due to a simple accounting trick: in the days before the election, the state authorities had raised the minimum deposit limit for forex Lira swaps from 10 to 30 percent.

Fleeing Turkish assets

The short attack put the axe on investors’ will to buy. Turkish government bonds and shares were thrown onto the market. The cost of five-year credit default swaps was recently higher only in Ukraine, Argentina and Lebanon. Confidence has already been damaged by the ongoing economic misery: From February 2018 to February 2019, prices in Turkey rose by around 19.7 percent. The unemployment rate is 13 percent, the key interest rate 24 percent. Loans can hardly be paid anymore, the amount of bad loans at Turkish banks increases.

Reform or final capitulation

The question is, when will the last hard-boiled long investors leave the country? The horrendous volatility over all assets alone is likely to classify the country as ineligible. One argument, however, speaks for the recovery of the lira: Turkish companies have taken on a lot of debt in dollars. If the lira becomes too soft, debt service will become unaffordable. Ankara must therefore save the lira. Or finally push through reforms. The low-wage country used to profit from the production of cheap export goods – the textile industry in Euroland Greece has been destroyed, while it is booming in Turkey.

Threatening contagion

The risk of contagion for markets such as Brazil or Indonesia is high due to the crisis in Turkey. Emerging market funds are likely to divest assets in other emerging markets because of Turkey in order to reduce their entire VAR (value at risk). Since the Federal Reserve slightly raised US interest rates, capital from risky markets has increasingly been flowing into the United States anyway.

Recovery or final lira shock?

Traders are now waiting for signals to improve. The lira is the indicator. It has lost around 30 percent of its value since the previous crisis in the summer of 2018. In the past five years, there has even been a minus of around 63 percent in the books. Obviously even the Turks fear a crash of the lira to the crisis levels of last summer: According to data from the central bank, domestic investors now hold around 176 billion dollars in foreign exchange. We are curious to see how the Turkish lira will continue – and wish you a successful day trading!

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.

01.04.2019 – Daily report. What a splendid weekly start for the bulls on the Frankfurt stock market: Strong economic data from the Middle Kingdom has pushed the DAX up. The index cracked the 11,700 mark in early trading. Before the USA and China had reported positive indications concerning the tariff controversy in the world-wide trade. This had already ensured a great first quarter on Wall Street.

DAX reaches 11,700 points

Joy for long investors: Most prices on the trading platform were up on Monday morning. The leading index climbed by around 1.5 percent and passed the 11,700 mark. The Frankfurt Stock Exchange thus continued the positive trend of the first quarter: from January to the end of March, the indicator gained around 9 percent. On Monday, demand was particularly strong for German auto stocks. This is no wonder, as the largest automobile market in the world reported excellent economic data.

Happy customers from China

In March, the mood index for small and medium-sized, mostly private companies collected by the business magazine “Caixin” rose by 0.9 points to 50.8 points. The increase was much stronger than expected: analysts had only forecast a minimal increase to 50.0 points. This is also the strongest level for eight months. At the end of 2018, the Caixin/Markit Purchasing Managers’ Index fell below the 50 mark for the first time since May 2017; in January, it had continued to plummet. A value below 50 points suggests a decline in production.
But the big red dragon had even more good news for investors: the mood is also surprisingly good among the large state-owned corporations. The Purchasing Managers’ Index (PMI) for the industry determined by the authorities rose more strongly than expected in March to 50.5 (February: 49.2) points. Hopes that the turnaround in the People’s Republic’s economic weakness had begun circulated immediately on the floor.
No wonder that equities in Asia rose. CSI 300 gained 2.5 percent to 3,970 points. In the wake of China, the Nikkei index in Tokyo rose by 1.4 percent to 21,509 points. And last but not least, hopes of an agreement in the customs dispute between China and the USA increased. Both delegations had already expressed their optimism before the weekend. The talks are to be continued this week. Correspondingly, Wall Street had also set out for a new highs.

Strong first quarter for Wall Street

In New York, bullish investors were barely able to walk with strength on Friday. The leading index Dow Jones Industrial, for example, went into the weekend with a plus of 0.8 percent to 25,929 points and a weekly gain of 1.7 percent. In the first quarter, the Dow thus recorded a gain of 11.2 percent. Not bad – the strongest first three months since 2013.
There is still room for improvement. The S&P 500 had increased by 0.7 percent to 2834 jobs on Friday. The profit in the first quarter was even 13.1 percent – the best period from January to March in 21 years. And the Nasdaq 100 recorded an increase of 0.8 percent to 7379 points on Friday. The balance of the high-tech index by the end of March: 16.6 percent. The last time there were more gains was in the first quarter of 2012. CFD trading is fun – especially with a bank that holds a Bafin license, where investors can be sure that quality and professionalism are on top of their list.

This is what the day brings

We’re curious to see if this goes on. Interesting trades are again waiting for investors in the afternoon with equities, bonds and currencies. In the USA, the March retail turnover will be published at 14:30 German time. The forecast for February is 0.3 percent.
At 15:45, the European Central Bank will publish its monthly report with details on bond purchases.
At 4 p.m. the latest sentiment data from the US industry (ISM index) will follow. The forecast here: 54.5.
We wish you a very successful day trading!

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.

29.03.2019 – Daily report. Behavior, but it’s bound to go up. The DAX marked a plus in early Friday trading. Thanks to the tailwind from overseas, the German stock market continues to buck the Brexit chaos. Investors in global trading are hoping for a breakthrough in the Chinese-American Trade War. In addition, economic data from the USA is expected this afternoon.

Barrier at 11,500 points

For the DAX, early trading saw an increase of around half a percent, but the indicator did not manage to break the 11,500 mark. The usual recovery on the labor market was only a side issue. The Federal Employment Agency reported around 2.3 million unemployed in March. This was 72,000 fewer than in February and 157,000 fewer than a year ago. The unemployment rate slipped by 0.2 percentage points to 5.1 percent. Optically, Deutsche Telekom suffered heavy losses. However, the share was only traded ex-dividend. However, negative analysts’ comments on the merger of Sprint and T-Mobile in the United States also ticked across the screens.

Wirecard vs. Financial Times

Wirecard came under pressure over an entertaining public feud with the Financial Times: Shortly after Wirecard sued the newspaper and its author Dan McCrum for damages, the paper shot back. The latest FT article on Wirecard states that many customers in Asia such as Centurion, PayEasy and Maxcone do business on a grand scale in the gambling industry. Even worse: Supposedly also in the porn industry! Shocking… The question arises whether the stock sellers are now prude, or whether they do not believe in solvent business partners. Whatever the case may be, a stock has seldom been as naked in the spotlight as Wirecard. Whether rightly or wrongly, must be seen.

Waiting for news from London and Beijing

Meanwhile, brokers in Frankfurt were waiting for movement at the currently smouldering top events. Once again a vote is due in London: In the afternoon, the British Parliament will again decide on the EU withdrawal agreement. However, this is only about the withdrawal treaty, not the political declaration on future relations with the EU. Whether the completely divided House of Commons will finally approve the treaty is in the stars.
In China, negotiations with the USA in the customs dispute are continuing. So far, both sides have adhered to the self-imposed news embargo. But if information is pierced, the stock market will react immediately. And there was also a little substance: US Treasury Secretary Steven Mnuchin spread a positive mood about the course of the talks on the fringes of a round of negotiations.

Share price surge from Asia

Prices in Asia rose accordingly: In Tokyo, the Nikkei closed Friday 0.8 percent higher at 21,206 points. This represents an increase of around 6 per cent on the books in the first quarter. There was an enormous buying mood in China, where the CSI 300 rose by a whopping 3.9 percent on Friday to close at 3,872 points. The bulls are rubbing their hands: In the first three months, the China index thus gained 29 percent.

Gains on Wall Street

Investors in New York also showed a cautious buying mood yesterday. The Dow Jones Industrial closed the day up 0.4 percent to 25717 points. The S&P 500 also gained 0.4 percent to 2815 points. And the Nasdaq 100 climbed 0.2 percent to 7320 points. The dripping economic data was ticked off calmly. For example, the third estimate of gross domestic product for the fourth quarter and the unfinished house sales in February were weaker than expected. The sum of weekly initial applications for unemployment assistance was somewhat more positive than expected. All economic data can be found here: https://bernstein-bank.com/de/research/#Market

The Dow is dancing on the 50-day line

And now again a little hint for the friends of simple chart analysis: If you look at a day chart of the Dow Jones, you will see something interesting. The lower deflections of the candles run in the past four days twice exactly up to the moving 50-day average. Then there was the recovery. So there seems to be a fraction of optimists who think buying in this terrain makes sense because they don’t believe the index will fall below the 50 line. You should keep this in mind on your trading platform in order to intervene quickly and effectively via direct market access with CFD if the situation requires it.

Important Notes on This Publication:

This is what the day brings

This afternoon, investors are looking for economic data from the U.S. again. The Chicago Purchasing Managers’ Index for March will start at 14:45. Forecast: 57.0. Shortly thereafter, consumer confidence at the University of Michigan in March is running on the screens at 15.00 hrs. Forecast: 97.6. Also at 15.00 o’clock the US sales of new houses are expected to rise in February.

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.