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11.03.2020 – Daily Report. The stock market in Frankfurt is taking action again, but only moderately. After the failed recovery from the previous day, prices are only rising a little. The Dow Jones had risen by almost 1,200 the previous evening. But US futures are crumbling again.

Slight gain on the Frankfurt Stock Exchange

It almost seems as if too many long investors burned their fingers yesterday. By noon the DAX had risen by a moderate 1.6 percent to 10,639 points. And this after mega gains on Wall Street. These, however, are only achieved in late trading – and so on Tuesday the first courageous investors on the German stock exchange walked into a bull trap.

The US futures fell by a good 2 percent on Wednesday noon. Brokers pointed to the lack of details in the aid package promised by US President Donald Trump.

Losses in Asia

As a result, brokers in Asia also held back. The Chinese CSI-300 lost 1.3 percent to 4,028 points in the morning. In Tokyo, the Nikkei fell by 2.3 percent to 19,416 points.

State money from the EU

Meanwhile, Europe is discussing a stimulus. The European Union wants to pump 25 billion euros into the economy to counter the worst effects of the Covid 19 epidemic. The money is to come from the structural funds and flow quickly.

Surprising interest rate cut in London

England has also introduced its own measures. First of all, the British central bank lowered the key interest rate by 0.50 points to 0.25 percent in a special session due to corona. This was the first interest rate cut since August 2016, and the Pound came under pressure only briefly: GBPUSD fell from 1.2936 to 1.2847 and then rose again to 1.2939. The Bank of England also plans to launch a credit program for small businesses in the coming 12 months.

Strong recovery in New York

The evening before, prices had risen sharply following the announcement of a $300 billion US economic stimulus package by the White House. The major indices closed at their daily high. The Dow Jones Industrial fizzled up 4.9 percent to 25,018 positions. That was a whopping 1,167 points. The S&P 500 also climbed 4.9 percent to 2,882 digits. This was the best daily performance since December 26, 2018, and the Nasdaq Composite gained 5 percent to 8,344.
The rebound was not really unusual: According to MarketWatch, the Bespoke Investment Group announced that in the ten cases since 1952 in which the S&P 500 had fallen by at least 5 percent on a Monday, Tuesday had brought a recovery averaging 4.2 percent.

Oil market between hope and fear

Meanwhile, investors are waiting for movement in the oil war between Russia and Saudi Arabia. Prices of WTI and Brent fluctuated sharply and, after an overnight recovery, fell by a good 4 percent. Moscow has probably not yet completely dismissed the possibility of a concession with OPEC, the market said. Reuters reported with reference to insiders that today there is a meeting between managers of Russian oil companies and the ministry.

Yesterday, however, Russia’s Energy Minister Alexander Novak told the TV station Rossia24 that the door between OPEC and Russia had not yet been closed. However, he added that his country could increase production by 200,000 to 300,000 barrels in the short term. However, this is only small-calibre compared to the bullets in the Saudi arsenal: Saudi Aramco had announced yesterday in an official stock exchange release that it would increase production to 12.3 million barrels per day from April. The state-owned company had last pumped an average of 9.7 million barrels from the desert floor.

This is what the day brings

The calendar of events on Wednesday brings some interesting events, you can find the overview as always here: Market Mover

For example, at 13.30, US consumer prices for February are reported.

The same for hourly wages/real income.

At 15.30 the weekly oil report comes in.

And at 19.00 U.S. Treasury figures.

The Bernstein Bank wishes successful trades!

Important Notes on This Publication:

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

On Tuesday the markets calmed down a little and we saw a slight increase. This is already encouraging, because no one knew what kind of reaction would follow after such a serious collapse. There were rumors of measures to stimulate the U.S. economy, which should prevent markets from falling even deeper.

The USD index chart of the day

The US has come up with various measures to support the economy. From cutting the rate by as much as 0.75% to cutting various taxes. Japan activated a second $4 billion stimulus package, mainly aimed at mitigating losses from coronavirus infection as well as encouraging small private businesses. On Tuesday, S&P500 rose by 0.6%, DOW by 0.8% and DAX closed minus 1.4%.

US DOLLAR

On Tuesday, due to positive news from the U.S. government and the preliminary stimulus package, we see the US dollar strengthening against all currencies. We predicted that sooner or later correction in the market will occur. Someone fixed the profit made, someone used the correction to make profit. The US dollar is growing by about 1.5% to all major currencies. We will observe the development of the situation. Serious stimulus measures are not in favor of a strong dollar. Therefore, this correction may be temporary. If partner countries do not take appropriate measures, their local currencies will inevitably strengthen against the dollar.

OIL

Oil tried to win back its losses and grew by almost 8% on Tuesday. Of course the price of $37 per barrel is not enough for exporting countries, but we probably see the beginning of a price war. Russia is not satisfied with shale oil production in the U.S., but the short-term effect will not affect it in any way, as most companies have already hedged the risk of a price decline. The time of low oil prices is ahead and the economy that was more ready for this turn of events will win this war.

GOLD

Gold became cheaper and is traded at $1652 per ounce. In fact, it was an expected movement, as the markets started to correct in all directions. The level of $1700 per ounce is still in force, and probably, after the correction, gold will check it again.

What is waiting for us today?

10.30 British GDP for February
13.30 US consumer price index base for February
15.30 US crude oil reserves

Important Notes on This Publication:

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

10.03.2020 – Daily Report. This was overdue: Investors on the Frankfurt Stock Exchange are taking action again in early trading on Tuesday. Previously, the DAX had crashed as hard as it last did on September 11, 2001, and investors are now hoping for government money in the USA.

Moderate turnaround in Frankfurt

The bargain hunters are here: some brave ones are getting back into the bombed-out stocks. The DAX climbed 3.4 percent to 10,991 places on Tuesday morning. US futures also rose by a good 4 percent recently.

Trump announces government aid

Tuesday’s new buying mood was supported by US politics: President Donald Trump has announced a larger aid package, he will give details later today. Previously he had informed about possible wage tax relief and loans for small businesses. In addition, there could be help for all those who are paid by the hour – because they are particularly hard hit after a sick leave. There is also help for the troubled US oil industry.

Meanwhile, CNBC reported that Trump plans to meet with leading managers and heads of the seven largest US banks at 3 p.m. East Coast time. Yesterday, the Federal Reserve had urged the banks to accommodate customers who are in arrears with installment payments. We are excited. If you trade CFDs and online stocks, you should keep your trading platform open and keep an eye on the news. By the way, the New York Fed announced that it will make more money available for repo transactions. By the way: Italy also promised state aid of 10 billion euros./p>

Slight recovery in Asia

All of this made for restrained courage in Asia. In China, the CSI-300 rose by 2.1 percent to 4,083 digits on Tuesday. And the Nikkei gained 0.9 percent to 19,867 points.

Biggest crash since 9/11

The German leading index yesterday posted its largest daily loss in almost 20 years. In the end, the DAX plunged by 7.9 percent to 10,625 points on Black Monday. An absolute minus of an incredible 916 points. At the daily low, the DAX had slipped to 10,556 points. This was the highest loss since the attack on the World Trade Center on September 11, 2001. In the end, a double blow from Corona and the price war between OPEC and Russia sent the cops to the boards.

This leaves a critical note: Why didn’t investors celebrate the fall in oil prices? Ultimately, this is the most gigantic economic stimulus package ever for the Western economy. We are sure that this insight will soon be spread on the trading floor.

Slaughter festival in Moscow

The situation is completely different for oil exporters. After the Saudis’ first salvo against Russia in the price war, the Moscow stock exchange went down on its knees, as we had already suspected in yesterday’s Special Report on the new oil war. The Russian RTS index slumped by up to 12.7 percent to 1,055 points on Tuesday morning. Above all, oil and gas stocks were taken to the scaffold. The sell-off was thus much stronger than in Frankfurt or on Wall Street – because the Russian Federation is completely dependent on the revenues from the oil and gas business. The Russian stock exchange remained closed yesterday because of International Women’s Day.

Mega sell-off in New York

Yesterday on Wall Street yesterday should go down in the history books: The Dow Jones Industrial lost more than 2000 points or 7.8 percent to 23,851 points. The worst sell-off for the Dow since the 2008 financial crisis, with the S&P 500 plunging 7.6 percent yesterday to 2,747. Here, too, oil stocks fell to their knees. And the Nasdaq 100 slipped 6.8 percent to 7,948 points. After the early sales panic, share trading was initially interrupted for 15 minutes – the first time since 1997.

What the day brings

The diary does not offer many interesting events on Tuesday, you can find the overview as always here: Market Mover

The Bernstein-Bank wishes successful trades

Important Notes on This Publication:

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

Here comes another black Monday. All world indices lost 3 to 10 percent in one trading day. This day will be recorded as the beginning of the next crisis, which appeared only because of the boom in social networks, inflating information about the flu, as well as the collapse of stock markets and the oil market to its lowest values in a long time.

EUR/USD chart of the day

What’s going to happen next? The markets have sagged very hard and some kind of driver is needed at least to stop this free fall. One of these drivers could be some positive information from the oil market. So far we have not seen any breakthrough in the decision to limit production and it is very likely that nothing will change in the near future. The markets will find the bottom somewhere in any case, and this will be another starting point for growth.

Euro

Due to soft monetary policy, the U.S. dollar is sliding against all currencies. The bulls on the euro showed its strength and took the currency out of the descending channel. Of course, such a strong growth should be accompanied by at least some minimal correction, but in the current situation it is not clear when it will start. The Euro is aiming at 1.16 and if the markets keep getting feverish, it is likely that we will come to test this area soon.

OIL

At the opening of trading on Monday, we saw one of the most dramatic oil falls since the Gulf War. Brent oil lost almost 30% of its value and by the end of the day was able to win back just over 8%. Brent is now trading at $35 per barrel. At the moment, the cost of oil, as one of the main energy resources is laid in the cost of almost any product that is produced in the world. A significant price reduction will affect literally all spheres of the global economy. Shale oil developers in the USA will suffer first, although this will not begin until six months later, because in most cases the credit money given to them to develop the fields is hedged in case of such situations.

GOLD

Against the background of a free fall in world markets, gold touched the level of $1700 per ounce and slightly bounced back. As we predicted earlier, this level is not the limit for gold, as panic in the markets has just begun to intensify. Demand for the metal may rise in just a few days and drive the price to historical highs. On Monday, gold trades at $1675 per ounce.

What is waiting for us today?

02.30 Consumer Price Index in China
11.00 EU annual GDP
21.30 Weekly crude oil reserves in the USA

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.

09.03.2020 – Special Report. Flash crash with oil: Saudi Arabia fired the first volley in the price war against Russia. Last week, Moscow had opposed a supply brake and let the OPEC meeting in Vienna fail. At the weekend, the Saudis lowered prices. They also want to increase production. Analysts see a drop in the oil price down to 20 dollars.

Bloodbath in oil prices

These are interesting times for traders: On Monday, the price of North Sea crude oil fell by 31.5 percent to 31.02 dollars per barrel. A barrel of US oil of the WTI variety has since fallen by 27.5 percent to 30 dollars a barrel. Only on 17 January 1991 was the loss higher, at 33 percent, when the First Gulf War broke out. Oil prices had thus fallen to their lowest level since early 2016. The low can hardly be sounded out. Although a countermovement is due after the sharp slump. But Riyadh and Moscow seem to be wildly determined to fight out the conflict.

Moscow satisfied with low prices

Russia opposes OPEC: Moscow can supposedly live well with lower prices. The Russian Federation wants to maintain market shares and above all destroy US companies. According to the “Moscow Times”, Russian President Vladimir Putin already said last Sunday that current oil prices were acceptable and sufficient to support the Russian economy. The Saudis have so far relied on high prices to support their own ailing economy and the stock market value of Saudi Aramco. That is now over.

Declaration of war from the Kremlin

Last week Moscow rejected OPEC’s proposal to cut production by 1.5 million barrels per day. The cartel had been in agreement – only the Russians backed out. On Friday, Russian Oil Minister Alexander Nowak told journalists at the OPEC+ meeting in Vienna that Russia would no longer adhere to any quotas or production brakes from 1 April. This was the first time in six years that an OPEC meeting had ended without agreement. Bloomberg commented that the draft final document reads like a divorce paper. Saudi oil minister Prince Abdulaziz bin Salman told delegates after the failed meeting that “today will be a day of regret”.

Riyadh bets on scorched earth

And over the weekend, Saudi Arabia fired back. On the one hand, Aramco lowered the forward prices for all regions across all products for delivery in April by 6 to 8 dollars per barrel.

In addition, according to CNBC, the kingdom is apparently facing a 2 million barrel per day increase in production; the station picked up on a report from Bloomberg. The “Wall Street Journal” also reported an imminent increase in production.

Reuters reported that the Saudis would increase production to over 10 million barrels per day. Currently, the country pumps 9.7 million barrels per day, but the maximum capacity is 12.5 million barrels. Saudi Arabia has by far the lowest production costs and therefore made a profit even at the lowest prices.

Oil spill ahead

The market was accordingly shocked. “Complete pandemonium at the open,” wrote Stephen Innes, chief strategist at Australian currency and CFD trader AxiCorp, late Sunday. And further: “The shock-and-awe Saudi strategy will propel oil markets into a period of radical uncertainty. Russia balking was one thing, but Saudi ramping up production is a bird of another feather.”

OPEC members were now preparing for a price war, soon they would publish plans to increase production, wrote Edward Bell, Commody analyst at the state-owned Emirates NBD, formerly known as the National Bank of Dubai. Specifically, Bell said: “Should OPEC+ members choose to raise output from Q2 onward, a wave of oil will be unleashed onto markets,” and further: “We expect to see Saudi Arabia, the UAE and other large producers in OPEC increase production over the rest of 2020 as they return to a market-share strategy rather than price targeting.

20 dollars in 2020

The consequence of all this would, of course, be a further sharp fall in prices. “$20 oil in 2020 is coming,” tweeted Ali Khedery, a former consultant for Exxon in the Middle East and now head of the US management consultancy Dragoman Ventures, on Sunday. Goldman Sachs said on Sunday that the price could plummet into the 20 regions. Together with Covid-19, the situation on the oil market is now even worse than in November 2014, when a similar battle drove prices down to 30 dollars a barrel by early 2016.

US oil industry must go to the scaffold

The share prices of the major energy companies are now likely to plummet. And the American and Canadian tar sand and oil shale producers in particular are facing hard times. According to Moody’s, the oil and gas industry in the USA is heavily indebted: Over the next four years, small companies will be owed 86 billion dollars in loans. Almost everything at or just above junk level. As Jeffrey Halley, market strategist at New York broker Oanda wrote on Sunday, “U.S. shale and Canadian tar sands are in for a nightmarish year, I fear.” “Production becoming a battle of who has the deepest pockets.”

As it seems, the Russians’ cheap strategy is also a payback for attempts in Washington to sabotage the Nord Stream 2 gas pipeline. About three weeks ago, Washington also imposed sanctions on the state-owned oil multinational Rosneft for transporting oil from Venezuela. Rosneft is run by the grey eminence in Russia: Igor Sechin, a close friend of Putin.

RTS, rubles, TASI under pressure

Who else loses? Above all, stock markets of countries that now have a huge hole in their budget because the oil price continues to fall. First and foremost the Saudi stock exchange with its Tadawul All Share Index (TASI).

Sooner or later Russia, too, is likely to feel the effects of falling oil prices – oil and gas account for almost the entire national budget. However, Moscow is sitting on high currency and gold reserves and is not in debt. So the Kremlin has a long way to go. Nevertheless: The RTS index will have a hard time getting out of turbulences. The ruble has already reacted to the recent development with a weakness attack and slid against the dollar to 73.50, its lowest level in four years.

Countermovement possible

But beware: After such a sharp slump, it is only a matter of time before massive speculators enter the futures market and pull the oil price up again. Especially if the Saudis and the Russians send out signals of reconciliation or even sit down at the same table. Especially since the global economy is likely to pick up again at some point after Corona and the economy is facing a huge pent-up demand. And note: In politics, no chart analysis helps – so you should keep your trading platform open and keep an eye on the regular market updates. The Bernstein-Bank wishes you much success with your trades!

Important Notes on This Publication:

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

09.03.2020 – Daily Report. Historic times on the stock exchange: The DAX plunges over 1,000 points at the opening The German leading index thus heads for the biggest daily loss since September 11, 2001, and not only that: Brent oil loses a staggering 30 percent at times due to an impending price war.

Bears in bloodlust

On Monday, prices could no longer hold steady: due to the drastic spread of the virus – especially in Italy – the DAX slipped by 7.8 percent to 10,637 points at the opening. Then it continued downhill to a low of 10,572 points – a drop of 8.4 percent. As a reminder: after the attacks on the World Trade Center, the DAX had fallen by 8.5 percent. Most recently, the index recovered minimally and was still down a full 5.6 percent to 10,896 positions.

Since the high of 13,795 points on February 17, the leading German index has thus fallen by around 23 percent at times. We are thus officially in a bear market, which applies from 20 percent. The shares of Deutsche Bank and Daimler suffered double-digit losses on Monday. The Deutsche Bank share lost a good 15 percent in the morning and reached a new record low of 5.61 euros.

Panic is also likely to rage on Wall Street today: The futures on the US indices dropped by around 5 percent. According to MarketWatch, trading in contracts on the S&P 500 was briefly halted on Sunday, as prices fell by more than 5 percent.

Crude oil in sell-off

As if Corona wasn’t enough, the oil market hit the stock markets hard. Traders fear a price war between Saudi Arabia and Russia – and thus a huge supply surplus. Negotiations on a production brake failed last week, destroying some hopeful long investors. On Monday morning, the price of North Sea crude oil fell by 31.5 percent to 31.02 dollars a barrel. This was the biggest percentage drop since January 1991, when the First Gulf War broke out. Most recently, Brent recovered and, according to Oilprice.com, cost 36.37 dollars (down 19.6 percent).

A barrel of WTI grade US oil was initially 27.5 percent cheaper at $30 per barrel. Oil prices had thus fallen to their lowest level since the beginning of 2016. Most recently, WTI changed hands at minus 21 percent for 32.65 dollars.

Euro and Bunds in demand

Once again, investors begged to be allowed to take their money to the European Central Bank and pay a small fee for it: The yield on ten-year German bonds slipped 0.13 percentage points in the morning to minus 0.846 percent – a new record low. This was out of fear that their own bank could topple over.

Interestingly, the euro rose against the dollar to 1.1492. EURUSD was thus more expensive than it had been for over a year. This movement indicates that European addresses are currently selling more US assets and exchanging the dollars they have earned for euros – perhaps because they urgently need money at home.

Yen long – Asian equities short

The same game could be observed in Japan. The yen rose due to asset repatriation, with one dollar buying only 102.52 yen. This put a strain on the export-oriented Japanese stock market: the Nikkei slipped by around 5 percent to 19,699 points. In China, the CSI-300 lost 3.4 percent to 3,997 jobs.

Losses also in cryptos

Even more interesting: Investors in the crypto-market are also apparently clammy or fearful – although virtual currency has always been regarded as a kind of Internet gold. And thus as disconnected from the real economy. Especially since no bank can tip over in cyberspace. The website CoinMarketCap reported that within one day over the weekend, the entire crypto market had shrunk by 21 billion dollars. Specifically, the market capitalization of all cryptos on Saturday evening was 251.5 billion dollars. 24 hours later, it was only 230.8 billion dollars. Bitcoin recently stabilized at 7,850 euros

New York on Friday moderately in minus

On Friday, the Dow Jones had still posted a modest minus. The leading index closed the day at 25,864 points with a loss of around 1%. Unbelievable but true: In the course of the week, the yield even rose by 1.8 percent. The S&P 500 lost 1.7 percent to 2,972 jobs on Friday. And the Nasdaq 100 dropped 1.6 percent to 8,530 points. The strong US job data was hardly noticed.

Goldman Sachs swam a little against the current trend: Before the current panic, analyst David Kostin wrote on Friday that there is currently only one topic among customers: Corona. Kostin, however, assumed that Covid-19 would only rage for a short time. The S&P 500 will therefore rise to 3,400 points by the end of the year. In the event of a recession, however, the broad market index could slip to 2,450. Well, with the exception of the oil sector, the entire real economy should be happy about the flash-crash in oil and gladly take it along as a stimulus

What the day brings

There are no important events in the diary on Monday – nobody would pay attention to them anyway. As always, you can find the overview here: Market Mover

The Bernstein-Bank wishes successful trades in these turbulences!

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.

The week ended with not very comforting news. Coronavirus continues to walk around the world and is not going to calm down. All world markets end the week in a red background. The data on the US labor market did not give any clarity at all.

Chart of the day – Oil Brent

This week will be very difficult for the market. There will be very little macroeconomic statistics and not enough information to make decisions. Such uncertainty will push capital to flight from risk.

Euro

The Euro made a dramatic leap up to an eight-month high. Problems with the coronavirus don’t go away and are still putting pressure on the EU economy. The sharp decline in the US Federal Reserve’s refinancing rate caused panic in the markets and pushed investors to withdraw to more secure assets. Of course, for such serious growth, the market has to roll back a little. Due to the lack of serious news during the week it is quite possible to expect a slight pullback in the Euro, because the market cannot grow so much and for so long. On Friday, the euro closes the week at 1.13 against the US dollar.

OIL

One of Friday’s saddest events was the OPEC meeting. During the meeting, due to Russia’s position, the countries failed to agree on a reduction in production. Brent is falling by almost 9% in one day and is likely to continue this movement. Black gold price is at its lowest level in two years and trades for $45.5 per barrel.

GOLD

Gold feels great and is preparing to break through the highs once again. Money is flowing from risky assets to safe havens, and the process will continue until the situation in world markets begins to correct. The Coronavirus is adding to the problems and is one of the catalysts of capital movement. Gold is traded at $1675 per ounce on Friday.

What’s waiting for us today?

00.50 Japanese GDP

08.00 Trade balance in Germany for January

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.

06.03.2020 – Daily Report. The sell-off on the stock markets continues. Wall Street is going under. The DAX follows. And US futures are deep red again. Oil remains under selling pressure. In contrast, government bonds and gold are in demand.

DAX and US futures weak – gold rises

The bears also raged on Friday. The DAX fell 4 percent to 11,468 points by noon. US futures fell by about 3 percent. Gold was in demand: The price of the precious metal rose 0.8 percent to 1,687 dollars. In contrast, the precious metals, which are also used in industry, declined: Silver lost 0.5 percent to 17.41 dollars per troy ounce. Platinum fell by 0.4 percent to 871 dollars.

Bond rush

Meanwhile, the flight to safe havens continued elsewhere: both Treasuries and German government bonds were in demand. The yield of the ten-year German Bunds slid to minus 0.714 percent – the record low of September 2019 is not far off. In the USA, bonds reached a record low for the tenth time in eleven days. The yield plummeted to 0.769.

Recently, more and more pros have come forward, saying that the Fed panicked after the rate hike. For example, “Bond King” Jeffrey Gundlach, the head of DoubleLine Capital, spoke on CNBC. The interest rate move was justified, but not the way it went. Then he admitted to gold – the price would rise even more.

Nervousness in Asia

Investors in the Asian stock market also showed nerves of steel. For example, the CSI-300 in China slipped by 1.6 percent to 4,139 points. After all, the index had approached its January high of 4,223 points the day before with the fourth consecutive day of gains. The weekly conclusion for the CSI: around 5 percent plus. In Tokyo, the Nikkei lost 2.7 percent to 20,750 jobs on Friday. The weekly yield is thus minus 1.9 percent.

New York in a frenzy of depth

The US bulls had to accept a strong sell-off on Thursday. In addition to Covid-19, the US industry also put pressure on sales, with fewer orders than expected in January.

The Dow Jones slipped by 3.6 percent to 26,121 points. The S&P 500 lost 3.4 percent to 3,024 jobs. And the Nasdaq 100 dropped 3.1 percent to 8,672 points. Is this already a final surrender? I don’t think so. Panic is characterized by losses of up to 10 percent in the final stage.

Warning about the global recession/strong>

Particularly as the world is threatened by a severe slump in the real economy, which is probably still not fully priced into share prices. Because to date, nobody can concretely imagine the consequences of such an unprecedented event. Nigel Green, head of the deVere Group, warned of a global recession. The risks of a sharp downturn increased significantly. However, he added that the economy would eventually recover strongly, and that global growth would even be possible once economies repositioned and adjusted – especially if central banks and governments intervened. deVere is one of the world’s largest investment advisors.

It remains to be noted that US President Donald Trump is expected to release $8.3 billion in corona aid today. And that England is apparently working on an emergency plan and Australia is also considering a new quantitative easing.

Oil under pressure

The shock-induced paralysis in the global economy triggered by Corona once again added to the price of oil. Brent lost around 2.5 percent to 48.76 dollars, while a barrel of WTI fell by 2.2 percent to 44.87 dollars. And this despite the fact that OPEC has now proposed even more drastic cuts in production than had already been announced. On Thursday evening after the meeting in Vienna, the ministers of the oil cartel surprisingly proposed an additional cut of 1.5 million barrels per day until the end of 2020. Unfortunately Russia has not yet agreed to this. The unusual thing is that this looks like an ultimatum to Moscow. Normally such steps are only published when everyone has agreed, commented Oilprice.com.

What the day brings

At the end of the week, the diary brings some interesting events, you will find the overview as always here: Market Mover

In the USA, the labour market report for February is due at 2:30pm.

Ditto the trade balance for January.

The Bernstein-Bank wishes successful trades!

Important Notes on This Publication:

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

Before taking a break from the coronavirus news, the markets were again in panic on Thursday. In the USA there were first victims in California, though before that all the dead were only in Washington. Now markets are evaluating the economic risks they will have to take during the epidemic, so the volatility of major indices has increased. The US government is allocating $8 billion to fight the epidemic and hopes to overcome it in the near future.

USD/CHF chart of the day

Actually, the situation is more complicated than it looks. The leading countries are trying to figure out what kind of losses they will incur in different scenarios. The ECB has asked banks for a possible work plan in case of an epidemic. U.S. analysts are calculating different options and have patience. As much as we would like, the markets are about to ” storm “. On Thursday, S&P500 and DOW fell by 3%, DAX lost just over 1.5%. The current situation does not even give an opportunity to predict the movement somehow, so we just have to observe the development of the situation.

SWISS Franc

The Swiss pound shows good dynamics. On Thursday, it broke a very important level of 0.9530 and rushed lower. These are the lowest values since March 2018. The dollar is getting weaker against all currencies, but against the franc it is getting better. Switzerland has almost no problems at the moment. Investors rushed to buy up the franc in order to wait for hard times and save their assets. Breakthrough of the level 0.9530 opens the way to the lows of January 2018 at 0.9270.

OIL

Traders waiting for OPEC’s decision. On Thursday Brent oil was traded at $50 per barrel. Another news for the oil was the agreement between the president of Russia and Turkey on a ceasefire in Syria. The fewer threats in the East, the cheaper oil is. OPEC meeting will continue on Friday. Oil production has to be reduced, because economic stagnation, reduced air travel and the shutdown of some production facilities around the world are reducing the demand for oil. If this decision is not made, we will see new lows.

GOLD

For gold, our predictions are confirmed, and we see another jump to $1700 an ounce. The gold looks very strong. It is very likely that next week we will see an attempt to take this level.

What is waiting for us today?

01.30 Australia’s January retail sales volume
11.00 Volume of production orders in Germany
14.30 USD Change in Non-farm Payrolls for 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.

05.03.2020 – Daily Report. After the heavy gains on Wall Street, Thursday looks like a day for the DAX bulls. But then the prices crumble. Many brokers are puzzling. Strong demand for New York Fed repo tenders suggests that the American credit market is drying up again – perhaps some major addresses are having liquidity problems after the corona crash and the horrendous volatility.

U-turn in Frankfurt

US futures pulled the DAX down: After a strong start to over 12,200, the leading German index was down 1.3 percent to 11,976 points around noon. The contract on the Dow Jones fell 2 percent, while the futures on the S&P 500 slipped 2.2 percent.

There were no concrete reasons for this in the mainstream media recently – perhaps it was profit-taking. Not surprisingly, German industry warned because of Corona: the danger of a recession had increased considerably. “Economic growth is threatening to almost come to a standstill,” according to the new quarterly report of the Federation of German Industries (BDI). Or the stock market is putting its money in a safe place because California has declared a state of emergency and the infection figures with Covid-19 in South Korea are exploding.

Cash injections against Corona

And the trading day had started so well. The International Monetary Fund (IMF) wants to help poorer countries and emerging markets to cushion the effects of corona. To this end, the IMF wants to make a total of 50 billion US dollars available for emergency loans. In addition, the US House of Representatives has passed a budget of 8.3 billion dollars against Corona – the Senate still has to approve what is considered safe. And Canada lowered the key monetary policy rate by half a point to 1.25 percent.

Profits in Asia

The reaction in Asia: In the People’s Republic of China the CSI-300 rose by 2.2 percent to 4,207 points. In Tokyo, the Nikkei increased by 1.1 percent to 21,329 jobs.

America’s banks pounce on Fed money

But why did US futures reset on Thursday? Perhaps the reason is a new American banking crisis. Because only shortly after the Fed’s interest rate move, the banks rushed into the New York Fed’s overnight repo transactions. Twice in a row, the funds were fully allocated. The blog ZeroHedge reported yesterday: “What is perhaps more notable is that the amount of securities submitted into

today’s repo op was a whopping $111,478 billion, which was not only higher than yesterday’s $108.6 billion, but it was an all time high amount of overnight funding needs expressed by dealers”. The USA had thus recorded an all-time high in the demand for overnight loans. We explain: The banks are not lending to each other and have to run to the Fed. But why all this? Did the rampant volatility on Wall Street cause a malaise among big investors? It looks like it.

Credit Suisse Advises Monster Money Wave

Meanwhile, Credit Suisse repo guru Zoltan Pozsar advised the Federal Reserve to “combine rate cuts with open liquidity lines that include a pledge to use the swap lines, an uncapped repo facility and QE if necessary. In short, the Fed should send a gigantic money tsunami of interest rate cuts plus completely open money taps into the repo market, and a new quantitative easing. If that doesn’t smell like the big crash… Many brokers also expect negative interest rates in the USA within two months. If you trade online stocks or CFDs, you should therefore keep an eye on the prices of the American banks – they are the canaries for a bear market in the US indices.

Profits in New York

All this had left Wall Street cold yesterday. And apparently a short squeeze sent prices up. The Dow Jones Industrial rose by a full 4.5 percent to 27,090 points. This was a nice recovery from the bottom to almost the 200-day line, most recently at 27,248 points. According to the chart analysis, the line is now acting as resistance. The market-wide S&P 500 hissed 4.2 percent up to 3,130 points. And the Nasdaq Composite climbed 3.9 percent to 9,018 points. The Beige Book supported the movement, and the Fed sees the US economy on a growth path despite the corona. For now.

What the day brings

On Thursday there are some very important appointments, you will find the overview as always here: Market Mover

For example, US productivity is reported at 2:30pm.

At the same time, the first US applications for unemployment benefits are received.

And at 4:00pm the industrial order intake for January follows.

In addition, the OPEC meeting in Vienna takes place.

The Bernstein-Bank wishes successful trades!

Important Notes on This Publication:

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