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06.02.2020 – Daily Report. The optimism on the stock markets remains intact on Thursday. On Wall Street, new records were set the night before. The DAX is only just below them. Investors have apparently checked off the corona dangers.

Good mood on the Frankfurt trading floor

The stock market took hold again in this country: the DAX was up 0.6 percent at midday, at 13,558 points. This means that the record high from the previous month at 13,640 points is not too far away, especially since the high in the morning was 13,606 points. On Wednesday the leading index had already gained 1.5 percent and closed at 13,476 points. US futures recently rose by 0.3 percent.

Hope in fighting the Corona virus

Many stock market participants firmly believe that the corona crisis will end. The World Health Organization (WHO) had denied the day before that there was a medicine against the virus, as reported by Chinese media. If this optimism doesn’t pay off. According to Jan Hatzius, chief economist of Goldman Sachs, the epidemic will cost 1 percent of China’s gross domestic product in the first quarter. And in the rest of the world, it will cost another 1 percent. The dent should be reflected quite quickly in the profits of listed companies.

Positive signal in phase 1

There was joy on the floor about the détente between China and the USA. Beijing is now reducing its special tariffs on US goods worth 75 billion dollars. The move comes at the same time as a reduction in US punitive tariffs on imports from China. So it seems that the initial agreement reached in mid-January is contributing to the trade dispute.
As a result, the Chinese CSI-300 rose by 1.9 percent to 3,900 points. And the Nikkei in Tokyo even gained 2.4 percent to 23,874 points.

New records in the USA

The evening before, American investors had already taken bold action. The Dow Jones rose by 1.7 percent to 29,291 points at the closing bell. It is therefore only a matter of time before the 30,000 mark falls. The S&P 500 and the Nasdaq Composite even marked new all-time highs. The S&P 500 advanced by 1.1 percent to 3,335 points. The Nasdaq Composite gained 0.4 percent to 9,509 positions. Brokers referred to the robust US labor market data from ADP. In addition, the stock exchange celebrated the end of the impeachment.

Acquittal in Impeachment

As expected, Donald Trump was acquitted by the Senate. Not because the Republicans are as unbelievably insane and backed a criminal as our Journaille insinuates. No, like Richard Nixon, his own party would have dropped Trump subito if there had been any real offense. But there weren’t. It is one of the duties of a president to investigate corruption. A presidential candidate like Joe Biden is not immune to it.
Our conclusion is that the Democrats have sunk themselves into the ground by attempting to remove him from office before the presidential election. Because the party that is now claiming such lofty values has never been interested in Biden’s enormously shady deals in Ukraine or China, or in the question of who in their own party was involved. We are curious whether there will be any investigations and revelations about this by chance before the election. The witnesses in the House who have been summoned for an inspection may also have finally convinced many voters that the Democrats are no longer the party of the working class. It is the lobby of the elites in the media, universities, Hollywood and the bureaucracy.
For the stock market this means that the chances for Trump in the presidential election have increased – and so might have the chances of the bull market continuing.

What the day brings

On Thursday the diary contains only a few important dates, you can find the overview as always here: Market Mover
The most important event will be the first applications for US unemployment assistance at 2:30pm.

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 Wednesday, a huge portion of positivity came to the market. The Chinese authorities announced that the situation with the coronavirus had changed. The positivity is based on the fact that the number of discharged patients was twice as high as the number of deaths due to the disease. It’s hard to understand where the positive is, given that 5000 new infections have been detected in the last 24 hours. However, the stock markets did not try to understand the news, noting the rapid growth.

Chart of the day DAX30

The second important news that has almost ceased to be noticed recently is the data on the number of newly created jobs from the American agency ADP. The analysts’ forecast was 156,000 people, 291,000 people in fact. After the publication of this news, the growth of stock markets and the US dollar accelerated.

Gold

Despite the reigning positivity, gold refused to decline further. Investors who have already bought the yellow metal are not in a hurry to part with it, waiting for a new wave of growth.

Bitcoin

On Wednesday night, the Bitcoin course came up to $9700. There is very little left to the round value. What is important to understand? The previous breakthrough of the level occurred on the news that China will support companies engaged in Bitcoin technology. The level was sharply broken through, and after a while the price went down hard.
Now the situation is different. Bitcoin is steadily rising, steadily approaching the level of 10,000$. Bitcoin’s breakthrough doesn’t mean it’s going to roll back soon. Perhaps, the process of accumulation is over and the price will be guided by last year’s highs. This idea is especially relevant in anticipation of the halving of Bitcoin.

Japanese Yen

The Japanese currency has been declining for 3 consecutive days, coming close to 110 yen per 1 US dollar again. Last time, after the stops were removed, a powerful pullback of 2.5 figures followed. For the pair to grow further, we must see the stock indices grow again on Thursday. And that would mean the American stock market is testing the historical highs again. The situation is very interesting, if it is followed by a pullback, then a double top will be formed – one of the most important figures of technical analysis.

What’s waiting for us today?

01.30 Australian retail sales for December
14.30 Number of initial claims for US unemployment benefits per week
15.15 Speech by Fed representative Kaplan

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.

05.02.2020 – Daily Report. Yeah, there is such a thing: In the midst of the plague, investors are boldly taking action again. Chinese media apparently reported a breakthrough in the fight against the virus. The DAX is rising. Asian stock exchanges are posting gains. The evening before, Nasdaq 100 and Composite even set a new closing record.

Frankfurt Stock Exchange rises

The bulls on the stock exchange have been moving slowly but inexorably forward recently. The DAX put its pre-market losses to one side and was recently up 1.1 percent at 13,434 points.

Interestingly enough, the DAX recovered yesterday, ending the day at 13,282 points, exactly on the 50-day line. We know this from chart analysis: former supports act as resistance on the way back. Will this resistance break sustainably? You should definitely keep your direct market access open and keep an eye on our regular market updates.

The most important topic on Wednesday was once again the corona virus. Investors rewarded the feverish search for drugs positively. US futures, for example, rose by around 1 percent.

Hope regarding the Corona virus

While the number of deaths approached the 500 mark, investors now put their hopes on drugs against the corona virus. According to Reuters, Chinese media reported the breakthrough of a research team. The day before, Bloomberg had already reported that Thai scientists had expressed hopes for a drug cocktail. Now it was said that the Wuhan Institute of Virology would acquire a local patent for Remdesivir from Gilead Scienes. The “New Straits Times” reported that Chinese doctors were betting on combinations of HIV and influenza drugs.

Gains on the Asian stock exchanges

As a result, Chinese shares rose. The CSI-300 closed the morning with a gain of 1.1 percent at 3,829 points. In Tokyo, the Nikkei 225 closed the day with a gain of 1 percent at 23,320 points. After the Chinese central bank injected liquidity, the Japanese central bank also signalled alarm: Deputy Head Masazumi Wakatabe said that an easing of monetary policy was not imminent. However, his institution would not hesitate to take additional easing measures if the risks became very high. Wakatabe is considered a proponent of aggressive monetary policy.

Optimism in New York

The evening before, the bulls had been in charge in the USA. The Dow Jones Industrial rose 1.4 percent to 28,808 points. The S&P 500 gained 1.5 percent to 3,298 jobs. And for the Nasdaq 100 it went up 2.3 percent to 9,334 points. The index thus reached a record high, just like the composite. And now both high-tech indices have risen a price gap.

What the day brings

The appointment calendar is full to bursting on Wednesday, you will find the overview as always here: Market Mover
First of all, the ADP labour market report for January in the USA is due at 15.15.

At 14.30, the trade balance for December will follow.

Finally, the Markit PMI Services for January follows at 15.45.

At 16.00 the ISM Purchasing Managers’ Index Services for January is published.

And at 16.30 follows the Oil Report of the Ministry of Energy.

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.

China’s central bank on Monday and Tuesday injected almost 250 billion dollars into the country’s banking system. In fact, it was the only thing that kept the local stock market from crashing. And even boosted the appetite for risk around the world.

Chart of the day S&P500

The second positive side was the shares of American technology companies. Their growth dragged stock markets around the world on Tuesday. As the volatility grew strongly, a huge number of speculators, trading inside the day, returned to the market. If something goes up, they buy it, if something goes down, they sell it. Mid-term investors are trying to stay away from this process.

Gold

Yellow metal has fallen by more than $40 in the last 2 days, returning to the levels of the beginning of the year. It is possible that yesterday the last positions were closed in the stops, giving the bulls an excellent opportunity to enter the market after a strong correction.

JAPANESE YEN

As risk assets grew, the Japanese yen fell sharply against all major and commodity currencies. Is this optimism justified? Probably not. Of the two protective currencies, the Swiss franc has grown much stronger against the US dollar lately. So, the growth potential of the yen, when the market turns around, is huge. Especially considering the fact that the situation with the coronovirus spreading only keeps on worsening.

OIL

Oil sellers have reacted to reports that OPEC countries are holding regular consultations. What do their representatives want? It’s about reducing oil production by 500,000 barrels per day. Demand has fallen much more and continues to decline.
In fact, market participants also admit it. On Tuesday morning, oil grew by 3%, but by the end of trading it returned to the opening level.

What’s waiting for us today?

02.30 Speech by Philip Lowe, Head of the Reserve Bank of Australia
10.30 UK Service Business Index January
13.15 Statement by ECB Head C. Lagarde
16.00 ISM Business Activity Index in the US Service Sector 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.

04.02.2020 – Daily Report. Investors are taking action again: initially cautiously on Wall Street. Then particularly strong in China. Because the central bank in Beijing is pumping fresh money into the system. And in the morning, the DAX also rises. But nothing has changed in terms of the corona virus.

Frankfurt wants to go up

The leading German index spread optimism: The DAX climbed 1.1 percent to 13,186 points on Tuesday afternoon. The price indicator received tailwind from the American futures on Dow Jones and S&P 500, which climbed by 1.1 percent.

US futures bet on Trump

As a reason for the rise in futures, the financial site “Marketwatch” quoted the investor/TV presenter Jim Cramer, who is well known in the USA and who explains the stock exchange in an entertaining way with his show “Mad Money”. Cramer tweeted that the contracts were rising because in 48 hours the impeachment would be over and because the Democrats in Iowa are in chaos during the primary election. And even the left-wing “Politico” added that five Dems could vote with the Reps for an acquittal in the impeachment. Oops…

Corona continues to rage

Meanwhile, the threat from China has not changed: The number of confirmed infections and deaths in China has once again skyrocketed. By Tuesday, more than 20,000 cases had been confirmed – over 3,000 more than the day before. The number of deaths increased by 64 to 425. This is the largest increase in infections and deaths in a single day to date.

Asia is still growing

Investors in Asia nevertheless took up equities. The Chinese CSI-300 made a nice profit of 2.6 percent to 3,785 digits. The Chinese central bank is pumping an additional 400 billion yuan net (around 51 billion euros) into the financial market via repo transactions. A signal that the market interpreted as determination. The Nikkei gained around 0.5 per cent to 23,084 jobs.

Profits in New York

The evening before, Wall Street had already posted a plus – supported by the ISM purchasing managers’ index. The Dow Jones Index rose by 0.5 percent to 28,400 points. The S&P 500 advanced by 0.7 percent to 3,249 points. And the Nasdaq 100 gained 1.5 percent to 9,126 points. The Tesla share caused a sensation with a jump in price of around one fifth.

Determination in OPEC+

Oil prices rose: WTI rose 1.9 percent to $51.08. And Brent rose 1.1 percent to 55.07 dollars. A nice countermovement: Last night, crude oil prices fell to their lowest level in just over a year. Crude from the USA cost less than USD 50 for the first time since January 2019.
In view of the dent in demand in China, the oil sheikhs and their allies apparently want to act: Experts are scheduled to meet in Vienna today and tomorrow. The market is rumoring of drastic production cuts. The “Wall Street Journal”, for example, reported that one scenario would involve a cut of 500,000 barrels per day; a second scenario would even involve a reduction in output of 1 million barrels. However, the group is not yet in agreement.

What the day brings

On Tuesday there are only a few important dates on the economic calendar. Market Mover
In the USA, for example, at 04:00pm the order intake for industry in December is reported. Ditto the order for durable goods.

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.

As long as there’s another small bounce in the market, you can pause and think about something unrelated to the coronovirus. And the first challenger we haven’t thought of in a long time is, of course, the English pound. Britain has finally got out of the EU and started a completely independent policy.
The main outcome of the meeting of the Bank of England, last week, was the decision of a board member, who changed his mind in the direction of tightening monetary policy.

GBP/Dollar chart of the day

But on Monday, the pound fell sharply against all major currencies. The reasons are the same as we considered a month ago. It is not enough to become independent, now they need to solve a huge number of real problems. And these problems will certainly have a negative impact on the economy in the near future. Pay close attention to the chart.

US DOLLAR

As we noted in the previous newsletter, Friday’s decline of the US dollar was illogical. On Monday, the American currency turned around. Potentially, it has a better chance of further growth due to positive swaps and global economic risks.

STOCK INDICES IN CHINA

Yesterday’s 8% drop in major Chinese indices should not mislead anyone. It’s a volume accumulated during the holidays. Taking into account that the same Japanese index was losing 7% at the moment, the fall of Chinese stocks can be considered not very significant.
It is much more interesting how events will develop in 3-4 days, when even extended holidays will end. If the production does not open, the fall of the Chinese stock market, followed by the world stock markets, may become disastrous.

OIL

The oil keeps dropping. And there are already clear milestones. China has reduced its exports of black gold by 20%. And that’s 3 million barrels a day. It’s just a huge volume by market standards.

What awaits us today?

04.30 Australian Reserve Bank interest rate decision.
10.30 UK Construction Business Index January
16.00 US production orders for December

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.

03.02.2020 – Daily Report. The bulls on the German stock exchange dared to make a small stabilization at the beginning of the week. In contrast, shares on the Chinese mainland rushed south by about 8 percent. Wall Street had also corrected on Friday. As before, the corona virus continues to dominate events.

Frankfurt rehearses the recovery

Regardless of the negative trend in global trading, the DAX recorded a slight gain on Monday lunchtime and the index worked its way up to 13,050. Most recently, the leading index was still in the profit zone at 0.2 percent with 13,004 points. There was a little tailwind again from the USA: Futures on the Dow Jones and S&P 500 climbed by around 0.3 percent.

The DAX rushes through the safety net

On Friday, the DAX had fallen like a stone through the 50-day line with a weekly loss of 4.4 percent; now it could head for the 100-day line, which is at 12,525. Or is this a bear trap and the index jumps back up? Given the exponential wave of disease and death in the corona, we can expect more rather than less bad news in the coming days. Who knows – maybe the breakthrough will come with a quickly available vaccine.

Corona is unstoppable

However, more people have now died in the People’s Republic from the novel corona virus than during the Sars pandemic 17 years ago. On Monday, the Health Commission in Beijing reported the largest increase in infections and deaths in a single day to date. According to the report, 57 people died of the lung disease again. This means that 361 people have died in the meantime. The number of reported cases shot up dramatically over the weekend – by about 2,800 to over 17,205 cases.

Depth rush in China

As expected, the Chinese CSI-300 caught up with the losses of the other stock markets after the stock market reopened. The index thus plunged by 7.9 percent to 3,688 points. The Shanghai Composite slipped by 7.7 percent to 2,747 on the worst trading day since 2015. The Chinese mainland stock exchanges reopened on Monday for the first time after the Chinese New Year holidays, which had been extended due to Corona. The Nikkei in Tokyo closed on Monday with a minus of 1 percent at 22,972 points.

Beijing pumps money into the system

Meanwhile, the Chinese leadership wants to strengthen the financial market with fresh money. On Monday the central bank provided the commercial banks with 1.2 trillion yuan, or around 156 billion euros, in liquidity via repo transactions. This should prevent the money market from freezing. The Renminbi continued to weaken and was converted against the dollar for 7.0229 – a minus of 1.6 percent.

Low level flight in the USA

On Friday the US indices had already come under heavy pressure. The Dow Jones Industrial ended the day with a 2.1 percent drop in 28,256 positions. The weekly balance: minus 2.5 percent. The minus in January was 1 percent. The S&P 500 lost 1.8 percent to 3,225 points on Friday. And the Nasdaq 100 was down 1.6 percent to 8,992 points.

Warning signals from the chart analysis

Incidentally, the Dow broke through the 50-day line just like the DAX. The blog “ValueWalk” noted that this breakthrough was the first time in almost four months. The four-year low in Chicago’s Purchasing Manager Index was the main reason. We think that: the next stop 100-day line at 27,023 points. But probably not without some skirmishes to regain the 50-day average.
By the way, the S&P 500 stopped exactly on the 50 line according to the textbook. The tech indexes are still hanging a bit higher. This is hardly surprising, since the network economy is less dependent on economic activity in a quarantined real world than the old economy.
Is this the end of the correction already? Due to the delay in detecting Corona cases, we are skeptical. It is also possible that China will cut the customs deal with the USA – which could lead to a veritable panic on the stock exchange. Meanwhile, we are looking at the copper price as an indicator of economic pessimism: copper has been on a steady decline since mid-January. The price has fallen from around 6,260 to 5,570.

Next stop: Immunity

In Washington last week the US Senate decided as expected by 51 to 49 votes not to call any further witnesses. Only two Reps switched sides. Now the vote on Wednesday on the acquittal of US President Donald Trump is due. In view of the verdict on Friday, the matter could therefore be settled quickly. At least from this side, Wall Street probably has nothing to fear. Meanwhile, the Democratic primary is about to begin in Iowa – with Socialist Bernie Sanders in the lead.

This is what the day brings

The ECB Monthly Bulletin runs at 15.45, interesting if you are trading euros or European government bonds.

At 16.00 the ISM Manufacturing index for January follows from the USA.

At the same time, American construction spending in December runs over the tickers.

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.

We hope that our subscribers benefit by viewing the mailing list every day. Our task is to highlight the most important thing that requires close attention from the huge amount of information that falls on you from all sides.
Last Monday, we first drew your attention to the huge market risks associated with the coronovirus. Only 7 days ago, almost no one paid attention to the problem. But how quickly everything has changed! The number of people who got sick increased 10 times in a week. And after the markets closed on Friday, Donald Trump signed a decree to introduce an emergency regime in the United States.

Chart of the day S&P500

The name of the document must not mislead anyone. Now we are just talking about denying entry to the country to citizens who have visited China during the last 2 weeks. Or quarantining them if they have American citizenship.
It’s still nothing yet, but it’s only been a week. But the markets are beginning to look at the problem adequately.

USD

On Friday, the US dollar fell sharply against all major world currencies. You don’t have to look for a logical reason for that. The market is brutal and constantly looking for ways to deceive us by doing the most illogical things.
For those who trade recently, we recommend looking at monthly charts for autumn 2008. During the last crisis, the American dollar rose sharply against the euro, the pound and even the Swiss franc.
Now the important difference is that the dollar has a large positive swap against all major currencies, which means that when the crisis expands, more and more money will flow into it.

Indices

After Thursday’s bounce, Friday was a “bloody day” for all stock markets. Investors were selling assets in panic. And by the time the markets were closed, the process had only accelerated. For many people it was understood that it was simply terrible to leave for the weekend with a large package of shares on hand. And, of course, someone had an insider on Donald Trump’s order to introduce an emergency regime.

Oil

Everything we have written about oil over the last week is becoming even more relevant. In fundamental and technical terms, its prospects are terrible. If the situation in China spreads around the world, oil will collapse to $15-20 a barrel. We hope that it will not go so far and that the spread of the virus will decline. However, the downside potential is huge, so it is worth thinking 100 times before trying to catch the “falling knives.

What’s waiting for us today?

02.45 Caixin PMI Index in China January
09.55 Business activity index in the German manufacturing sector for January
10.30 UK Manufacturing Index January
16.00 55 ISM Manufacturing Index 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.

31.01.2020 – Daily Report. Thus, the recovery is not going to happen: The German leading index started strongly into Friday. However, recently prices have been crumbling again. In the afternoon, important decisions are pending in the USA.

Frankfurt runs sideways

The DAX has recently remained unchanged at 13,158 points. Before the stock exchange opened, the increase was around 100 points. The index should better shake off its losses, as yesterday’s loss has plunged into terrain below the 50-day line. The US futures on the Dow and S&P 500 lost 0.4 and 0.2 percent respectively. News from China continued to weigh on the stock market.

Corona expands

The corona virus continues to spread rapidly, the infection rate is now higher than for SARS in 2002/2003, with Beijing now reporting 213 deaths and the number of confirmed cases in the People’s Republic climbing to around 9,700. Italy reported the first case. The World Health Organization (WHO) has now classified the outbreak as a “health emergency of international concern”. Strangely enough, the WHO stressed that no travel and trade restrictions were necessary.

Asia inconsistent

The Nikkei closed 1 per cent firmer at 23,205 points, the balance for the week is minus 2.6 percent; the return for the whole of January is minus 1.9 percent. Hong Kong’s Hang Seng was 0.5 percent weaker on Friday at 26,313 points. Business on the Chinese mainland stock exchanges remained dormant.

Mixed economic data from China hardly played a role on the stock markets. As expected, the mood of purchasing managers in China’s large and state-owned industrial companies deteriorated somewhat in January. By contrast, the purchasing managers’ index for the service sector rose somewhat.

Signal in phase 1

Meanwhile, the USA appears to be loosening its tough stance on Huawei – perhaps a sign of easing tensions in the direction of Beijing. The Wall Street Journal reported that the Commerce Department has abandoned long-awaited plans to tighten controls on American exports to Huawei. The Defense Department has also opposed tighter export controls. According to the original plans, component supplies from US companies should be prohibited if they contain 10 percent of US technology.

New York is turning up

On the US stock markets, the bulls made a late attempt at recovery yesterday. Stock exchange traders dug up the above-mentioned WHO statement as an argument for this. After the indices had mostly remained in the loss zone during the day, they finally went with profits from Thursday. The Dow Jones Industrial closed with a plus of 0.4 percent at 28,859 points. Yesterday, the Dow had turned up again at the textbook 50-day line. Sometimes the basics of chart analysis are really enough for trading. The S&P 500 finally climbed 0.3 percent to 3,284 points. And the Nasdaq 100 gained 0.4 percent to 9,136 points. Amazon’s share caused a sensation with a jump in price due to strong quarterly figures.

Possible decision in Impeachment

The Impeachment procedure could be finished today. Which should be met with a round of applause from Wall Street. Because with Lamar Alexander from Tennessee an important Republican senator now wants to vote with the Dems for the summons of new witnesses. …who may no longer have the majority for subpoenas. And not only that: Now also an acquittal of Donald Trump is approaching – for him only a simple majority is necessary. For a conviction, two thirds of the senators would have to vote. We’ll see.

Surprise at Sterling

The British pound took a small leap of joy yesterday – the Bank of England left its key interest rate at 0.75 percent. A narrow majority of investors had expected a rate cut. Cable was last quoted at 1.1894 Euro. The BOE lowered its outlook for economic growth: 0.8 percent in 2020 and 1.4 percent in 2021. In November, the forecast had been 1.2 and 1.8 percent respectively. The market now largely assumes that interest rates will be raised by August at the latest. Otherwise: Farewell – at midnight German time, Britain’s membership in the European Union ends.

This is what to expect today

The diary brings some important events at the end of the week.

First of all, at 14.30 in the USA, personal income and expenses for December are scheduled.

At 15.45, the Chicago purchasing manager index for January follows.

And at 16.00 o’clock follows the consumer confidence of the University of Michigan for January.

The Bernstein-Bank wishes successful trades and a relaxing weekend!

Important Notes on This Publication:

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

3 days ago, in our newsletter, we noted that any rebound in oil would be a great opportunity for new sales. This is exactly what happened in the market. It is not clear which optimists were buying black gold a couple of days ago. But it is clear that they paid in full for their decision yesterday.

The WTI chart of the day

More and more airlines are completely closing their flights to China. And the planes that fly into the sky are only 10%-20% full. If we add to this a sharp decline in transportation within China itself, the drop in demand looks extremely negative for the oil market.

EURO

On Thursday the pair EUR/USD pushed back from the level of 1.10. During the previous 2 days the bears tried several times to push the price lower, but failed to do so neither against the background of the coronovirus, nor against the background of a huge number of open positions towards positive swap. This indicates the fundamental and technical strength of the Euro in the short term.

COMMODITY CURRENCIES

Australian, Canadian, New Zealand, Russian currencies … the list can go on long. All currencies whose exports are based on raw materials rolled down the stone. After Thursday, when you look at the charts, the technical picture of these currencies, against the U.S. dollar, seems simply terrible. From a fundamental point of view, everything seems no less terrible.
So, what is it? Are these pairs going to keep falling? According to the technical and fundamental analysis – they will fall. What can come to their aid? Traders should not forget, when all in the market wait for the same event, it can not happen. In this case, if everyone who wanted, managed to put on the fall of commodity assets. Well, if new speculators enter the market playing against commodities, nothing can prevent further decline.

What is waiting for us today?

00.30 Tokyo Consumer Price Index in January.
11.00 GDP data for the 4th quarter in the EU
14.30 US personal spending and income data for December
16.00 University of Michigan USA Consumer Confidence Index for December

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.