News

23.01.2020 – Daily Report. The fear of the corona virus is back. Wall Street is crumbling after S&P 500 and Nasdaq 100 initially set more records. Brokers on the Frankfurt stock market are also waiting in the wings. Especially since a bouquet of important economic data is due in the afternoon – including the ECB’s interest rate decision.

Frankfurt hesitates again

The DAX was down 0.4 percent at 13,468 points on Thursday afternoon. After its all-time high in early trading yesterday, the leading index had fallen back again.
The harsh tones from the USA caused irritation – Washington has again threatened to impose special duties on European cars. US President Donald Trump said on TV channel Fox that if there was no agreement in the trade dispute with the EU, 25 percent punitive duties would be imposed on cars from Europe. In addition, at the World Economic Forum in Davos, US Finance Minister Steven Mnuchin linked the issue to the planned digital taxes of several countries. These taxes would primarily affect US corporations such as Google and Amazon. Mnukhin emphasized that if there were unfair digital taxes, the USA would respond with automobile duties. Otherwise, hardly any broker in Frankfurt expected a change in the European Central Bank’s key interest rate.

Asian stock markets in the red

Investors in Asia also remained on the sidelines. The number of deaths in China has now climbed to 17, with the authorities confirming almost 600 infected patients. Despite the closure of the city of Wuhan, investors fear the spread of the epidemic – after all, millions of Chinese are likely to travel domestically and abroad during the week-long Lunar New Year holidays which begin on Friday.
The CSI 300 lost 3.1 percent to 4,004 points. And the Nikkei dropped 1 percent to 23,795 digits.

New York hesitates after the high

After another record run, the New York Stock Exchange took profits for the time being. Although the Dow Jones Industrial missed an all-time high and closed the year at 29,186 points, a minimal 0.03 per cent lower than the previous year. In contrast, the S&P 500 and the Nasdaq 100 reached new highs in the meantime. The S&P 500 closed 0.03 percent higher at 3,322 points. And the Nasdaq 100 exited trading with a gain of 0.2 percent at 9,189 points.

Sleight of hand against the Fed

Meanwhile, Donald Trump again dealt against the US Federal Reserve. He told the American television station CNBC that their interest rate hikes in the past had been big mistakes. Without the higher interest rates, the Dow Jones would be 5,000 to 10,000 points higher. At the same time, according to Trump, US economic growth would be around 4 percent – almost twice as high as estimated for 2019. We are curious whether this criticism will prompt the Fed to make further rate cuts.

The unexpected often happens

And once again the urgent warning: If you trade CFDs or online stocks on the US stock exchanges, you must keep an eye on the impeachment theatre. An unexpected drop of Trump can trigger a massive price slide. This has just been indirectly confirmed again by Nigel Green, head of the deVereGroup, one of the largest investment advisors in the world.
The bullish financial market is currently simply indifferent to the possible dismissal, the blog “Valuewalk” quoted the manager as saying. Normally a major geopolitical event like the trial of a US president would send shock waves into the financial market, Green said. But this time it was different: “This is because investors see the likelihood of Trump being removed from the White House following a Senate trial as almost zero. Our reverse conclusion: A surprise would be a massive short event.

That’s what the day brings

The calendar contains some interesting dates today, you can find the overview as always here: Market Mover
The ECB starts the afternoon with its interest rate decision at 1:45pm.
At 2:30pm the weekly first applications for unemployment assistance in the USA follow.
Afterwards at 4:00pm the US early indicators are announced.
At the same time the consumer confidence runs over the tickers.
And at 4:30pm the weekly oil report will be published.

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 is struggling hard with the coronavirus. Streets are treated with special means, people at airports are thoroughly checked, patients are immediately quarantined. Optimism in the Chinese government and the announcement of a clear plan to contain the virus outbreak have calmed the world public and become a small driver for the stock market. Chinese stock indices have recovered from this year’s low and pulled the rest of the indices with them.

USD/CAD chart of the day

During the European session, the DAX updated its historical high at 13642, and afterwards, in the U.S. session, the S&P500 repeated the same thing, reaching 3340. Overall, the markets are quickly turning optimistic as soon as they see the threat weakening.
The major crypto currencies grew mainly yesterday on the basis of positive news from a number of central banks of Western central banks as well as the Bank of Japan. It is expected that the group will start working soon to discuss possible creation of own crypto currencies as a payment instrument. The total capitalization of the cryptomarket reached $241bn.

CANADIAN DOLLAR

As expected, the Central Bank of Canada kept its key interest rate at 1.75%. It is very important that the phrase, the rates are “appropriate”, has been removed from the statement, which indicates that the rate is likely to change in the future. The Bank of Canada statement proved to be more restrained than expected. The result was the growth of USD/CAD pair to 1.3150 within a few hours.

EURO

Already today we are waiting for a decision on the interest rate of the European Central Bank, and after the speech of Christine Lagarde, who recently became head of the ECB. The ECB is not expected to change its monetary policy. Data from the December meeting indicate that the EU economy is slowing down and there are no signs of a possible recovery. Therefore no surprises are expected from this meeting. Euro trades below 1.11 as well as below 50, 100 and 200 moving averages, which increases bearish sentiment. If ECB statements are too cautious, Euro might well try to reach the psychological level at 1.10.

What is waiting for us today?

00.50 Japan Total Trade Balance for December
01.30 Unemployment rate in Australia for December
13.45 ECB decision on interest rate
14.30 ECB press conference

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.

22.01.2020 – Daily Report. Finally: The German leading index has set a new record. The MDAX also reached previously unattained heights. The German stock market has thus decoupled itself from the US stock market, which was weaker yesterday. Brokers cited as reasons, among others, the convincing approach of the Chinese regarding the corona virus.

New records for DAX and MDAX

A toast to the bulls: The DAX broke through the 13,600 mark shortly after opening and climbed to a new high of 13,632 points. However, the last thing to do was to go for cash again – the leading index was only 0.1 percent up at 13,569 points. The MDAX also climbed to a new record of 28,884 points at the start of trading, only to fall back to 28,804 points (plus 0.2 percent).

Brokers cited the positive figures for the US reporting season to date, the continued supply of cheap money to stock exchanges by the central banks and hopes of a recovery in the global economy as factors for the new optimism. And then there was China.

China’s new openness is convincing

In contrast to previous crises – such as the SARS outbreak in 2003 – the leadership in Beijing has this time decided on an almost radical transparency. For example, Li Bin, the vice-chairman of the National Health Commission, announced that there have been 440 cases of the corona virus in China to date, and nine deaths. In the meantime, doctors have 1,394 patients under observation. The authorities installed body scanners to measure fever at the airport of Wuhan, the centre of the epidemic, and patients are immediately quarantined.

The communist leadership sent out a drastic warning: In the social media, the Central Political and Legal Affairs Commission in Beijing posted that anyone who concealed cases would be nailed to the pillory of shame for all eternity. For whoever puts the saving of politicians’ faces above the interests of the people is a sinner of the millennium towards the party and the people.

Recovery on the Asian stock markets

As a result, the financial markets were under the impression that China would quickly get the new lung disease under control. And thus avoids serious economic consequences for the domestic economy. As a consequence, the Red Chips in the CSI-300 closed 0.4 percent firmer in the morning at 4,132 jobs. Let’s wait and see if and how quickly the epidemic can be contained – in the meantime, besides Wuhan, cases have been reported from Beijing, Shanghai, Tianjin, Zhejiang, Henan, Chongqing, Hong Kong, Bangkok, Seoul, Tokyo, Brisbane, Taipei – and also from the USA.

Favourable economic data from South Korea also underpinned hopes of a global economic recovery. The Nikkei, for example, closed with a plus of 0.7 percent at 24,031 points.

Wall Street resets

After the recent record run, investors in the US took a short break yesterday. Yesterday, the Dow Jones Industrial lost 0.5 percent to 29,196 points. The S&P 500 closed 0.3 percent lower at 3,321 points. The Nasdaq 100 lost only 0.1 percent to 9,167 points. The U.S. Centers for Disease Control and Prevention (CDC) caused a moment of shock when the first corona patient was identified on the West Coast in Seattle. After that, airlines and hotel stocks in particular came under pressure on the stock exchange.

The Republican front stands

Let’s take another look into the Washington swamp: Republican majority leader Mitch McConnell allowed the Democrats in the Senate two small compromises to keep the moderates of his own faction in line. Thus, the duration of the pleadings will be increased from 24 to 48 hours and the documents from the proceedings in the House of Representatives will be admitted as evidence in the Senate. But in four separate ballots, the Reps, with 53 to 47 in favour, voted down all of the Dems’ submissions – now no additional documents from the White House, State Department, Defense Department and Office of Management and Budget will be requested. For the time being, no disturbing fire is to be expected from this side – Wall Street is counting on Donald Trump in view of the economic success.

What the day brings

In the afternoon, some important economic data is scheduled. As always, you will find the overview here: Market Mover
Thus, at 2.30 pm the CFNA index for December starts.

The FHFA house price index for November follows at 15.00.

One hour later the sales of used properties are reported.

And at 4.30 pm the weekly crude oil stocks are reported.

Otherwise, the economic forum continues in Davos.

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.

Yesterday, the World Economic Forum opened in Davos. More than fifty statesmen, including the President of the United States and the Chancellor of Germany, will take part in this event. The main topics of discussion will be the problems of climate change, correction of the “broken” system of economy, as well as preparing for environmental work of the future.

GBP/USD Day Chart

Of course, this event will be closely watched by investors. In such forums new business ideas are born, problems are solved and strategic decisions are made. We are waiting for loud statements from world leaders.
Meanwhile, a new coronavirus is gaining momentum in China, which keeps the whole Asian region in suspense. American and European markets reacted nervously to the situation in China and traded in mixed dynamics.

ENGLISH POUND

GBP/USD pair shows good dynamics last days. Yesterday, on the unemployment data, the pair reached the resistance level of 1.3080, which is the upper bound of the two-week descending channel. However, it should be noted that by the end of January, the UK is expected to leave the European Union, after which the stage of trade negotiations will start, which may take longer until the end of this year. If the December GDP of the kingdom shows negative dynamics, this trend will bring the UK closer to economic recession. The combination of these factors may negatively affect the GBP and return it to the December lows at 1.29.

OIL

Two weeks later, when Brent suffered the biggest fall in recent years, the market for petroleum products faces a new crisis. Yesterday Libya announced that it was reducing oil production from 1.2 million barrels per day to 72,000 barrels per day. Such statements and refusal to ship oil from major fields may seriously affect the market. However, there is a possibility that Libyan risks may be insignificant on the data on gasoline and distillate reserves in the USA, which turned out to be significantly higher than predicted. At the end of Tuesday trading session Brent was traded at $64.25 per barrel.

What is waiting for us today?

10.30 Net borrowing in the UK public sector
14.30 Chicago FRS National Activity Index
14.30 Canada’s basic consumer price index for 2019
16.00 Bank of Canada interest rate decision

Important Notes on This Publication:

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

21.01.2020 – Daily Report. Unexpected neck blow for investors in Asia: fear of a deadly lung epidemic has pulled prices sharply south. Brokers in Germany are also predominantly pushing the sell button.

Frankfurt in reverse gear

Only a few traders had this threat on their radar: the spread of a new type of virus-induced lung disease in China is unsettling investors. The DAX fell by 0.5 percent to 13,487 points in early Tuesday trading. The indicator thus moved further away from its record high of 13,596 points, which it reached about two years ago. The strong ZEW economic data only supported the prices a little.
US futures also fell by 0.4 percent. Government bonds and the Japanese yen were in demand as safe havens. There were no specifications from the USA for the DAX: The American stock exchanges remained closed yesterday because of the holiday “Martin Luther King Day”.

Threatening epidemic in China

In the People’s Republic of China, the CSI-300 dropped by a whopping 1.7 percent to 4,114 points in the morning. Brokers explained the development with the outbreak of the corona virus and four deaths. The disease, which resembles pneumonia, could cause considerable damage to the retail trade and tourism, the floor said. Some stock market experts drew parallels to related epidemics such as SARS and MERS. The situation appears to be more dangerous than previously suspected.
China’s President Xi Jinping said yesterday, according to the state TV station CCTV, that the outbreak must be taken seriously. Also on state television, scientist Zhong Nanshan, head of a commission investigating the disease, confirmed that it is now certain that the epidemic can be transmitted from person to person. Previously, only animals – specifically the fish market in Wuhan – had been considered a source of infection. According to the “Wall Street Journal”, the number of confirmed cases in the Middle Kingdom has now tripled to over 200. And this before the great wave of travel to the Chinese New Year. First cases have also been reported in Thailand, Japan and South Korea. The World Health Organization has now convened its Emergency Committee because of the diseases.
In Hong Kong, the continuing protests also depressed the mood. As a result, the Hang Seng fell particularly sharply by 2.8 percent to 27,985 points.

Japan’s central bank stands still

In Japan, the Nikkei 225 lost 0.9 percent to 23,864 points. As expected, the Japanese central bank did not touch the key interest rate of minus 0.1 percent. The goal remains to push the yield on ten-year government bonds towards zero. At the same time, the central bank raised its economic forecast by 0.2 points to 0.9 percent, justifying the move with the reduced risks in the course of Phase 1 between China and the USA.

Institutions sell oil

Oil prices continued to fall, WTI lost 1.5 percent to USD 57.81, Brent slipped 1.1 percent to USD 64.39. According to an analysis by Reuters, many major speculators have exited their long positions after the situation between Iran and the USA calmed down. By 14 January, fund managers had sold the equivalent of 64 million barrels of WTI futures.

Short process in Impeachment

For brokers, the question could become interesting in the coming days as to whether the majority of Republicans in the Senate will push through a short trial; or whether there are defectors who, just like the Democrats, now want to summon witnesses in impeachment after all. If so, the stock market is likely to interpret this as a signal that there is a crack in the Republican faction. And that US President Donald Trump is in danger – which would be a bearish signal for Wall Street. A quick acquittal, on the other hand, would be a bullish factor for anyone trading CFDs on US indices or online US stocks.

What the day brings

The diary does not show any really big 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.

Yesterday America celebrated Martin Luther King’s Day, so the US markets were closed. Usually on such days, the market activity on all world markets decreases. During the trading session, the DAX index is slightly increasing, adding 0.17% to the previous closing.

USD/CHF chart of the day

Already on Thursday, the first ECB meeting of this year will be held. Bidders are very cautious, as they are likely to hear some information about the ECB stimulus measures. In general, the easing of tension in the trade wars between the U.S. and China and the likely pause in further Fed interest rate adjustments have left no choice to bidders and force them to buy shares. This week, there will be quite a lot of different fundamental data waiting for us, from which investors will make decisions.

JAPANESE YEN

The Japanese yen has come close to the levels of the downtrend, which has been going on since 2015. Trading above 110 in a weak market, the yen did not provide enough momentum on the first day of the week to go even higher. Investors are just waiting for the Bank of Japan meeting, which will be held today. Now the USD/JPY should confirm the weekly breakthrough above the current levels and fix there. If that doesn’t happen, it is likely to roll back to 109.80. The further movement will depend on the economic data from the USA. If they surprise positively, we might see a new high at 110.70 on the Yen due to the strengthening of the US dollar.

SWISS FRANC

It feels like there’s nothing to stop it. Franc has always been one of the protective currencies and its strengthening gives not very good signals for the European market. Investors do not really believe in the growth of the economy of the European Union and at the moment they just buy back the Swiss franc, keeping their savings in a stable currency. It is very likely that this trend of the Swiss franc will continue. At the moment, the currency pair has worked out its growth to the level of 0.9690, now we can expect a further decline to 0.9660 and possibly 0.9590, where the price is waiting for the first serious support.

What is waiting for us today?

04.00 Bank of Japan press conference and interest rate decision
10.30 ILO unemployment rate in the UK for November
11.00 ZEW Institute business sentiment index

Important Notes on This Publication:

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

20.01.2020 – Daily Report. We could gradually write this market report with copy and paste: Wall Street is setting new records, the DAX is hesitant. And the MDAX has reached another all-time high. But in the meantime, Wall Street looks increasingly overbought – when will the permanent bull market end? Certainly not today, because the US stock market remains closed.

Threatening double top

On Monday morning, the DAX made no move to follow the USA’s lead: The German leading index lost 0.2 percent to 13,505 points. On Friday, the price indicator had made it to 13,558 points. Thus, the DAX was only 41 points below its record high of 13,597 points at the beginning of 2018. Now the bulls had better get going soon, otherwise a double high is imminent. The chart analysis shows that this is a classic sell signal.

Meanwhile, the MDAX reached a new record high at the start of trading, rising to 28,815. Recently, however, it also crumbled, falling 0.1 percent to 28,738 points.

Asia predominantly solid

Asian stock markets rose on Monday on hopes of a recovery in the global economy. The Chinese CSI-300 climbed 0.8 percent to 4,185 points. And the Nikkei closed 0.2 percent higher at 24,084 points. In contrast, the Hang Seng slipped by 0.9 percent to 28,796 points due to new protests in Hong Kong.

Records, records, records

Wall Street had continued its series production of all-time highs on Friday. Dow Jones Industrial, S&P 500 and high-tech indices reached new highs. At the closing bell, the Dow was 0.2 percent firmer at 29,348 digits. In the course of trading, it had pushed the intraday high to 29,374 points. The S&P 500 finally gained 0.4 percent to around 3,330 points. The Nasdaq 100 gained 0.5 percent to 9,172 points.

In the USA the air is getting thinner

The major US indices have now moved a long way from normality, measured by moving averages. Take the Dow as an example: the 50-day line runs at 28,240 points, the 200-day line even at 26,909 digits. The last time the leading index touched both lines was in early October. The 14-day Relative Strength Index (RSI 14) reached oversold territory at 72.62 points. By the way, the high-tech indices have been trading in oversold territory on the RSI for several trading days now.

All this means that a reset is overdue. But when? Probably when unexpected events provide the bulls with reasons to make a killing – such as new Chinese trickery in the customs dispute or an imminent betrayal of Republicans in the Senate during the Impeachment. So be sure to keep an eye on the regular market updates.

It is also quite possible that the cracking of the 30,000 mark in the Dow will cause a final buying frenzy before the hangover sets in. Such a big house number always convinces even the last anxious ones, while the professionals discreetly leave the parquet when the amateurs appear. According to the teachings of Behavioral Science, a headline in the “Bild” would be appropriate, for example according to this freely invented pattern: “Dow 30,000 – so you can get rich with US stocks!”

Bank of America warns of the bubble

Chief Investment Strategist Michael Hartnett from Bank of America just spoke with a similar tone. In his weekly “Flow Show” he stated: “Q1’2020 = Q1’2000”. There is euphoria everywhere. The clearest parallel to the time before the bursting of the dotcom bubble was the emergence of the “Trillion Dollar Babies”, i.e. stocks worth over 1 trillion dollars. This is the direct result of “$12 trillion of QE since Lehman”. In addition, there were “$1 trillion in stock buybacks past 5 years by top 20 US companies (amounting to $381,000 per employee”. Now the S&P 500 “just 5% away from becoming largest bull market of all time (3498) even as the Fed is now stuck and can never again allow stocks to drop as US financial assets (i.e., Wall Street) is a record 5.5x size of GDP (Main St). In short, the entire market is now “too big to fail.”

Derivatives-Hausse with Bitcoin

What remains is a look at another rally: On Friday Bitcoin broke through the $9,000 mark for the first time since November, but recently dropped 0.7 per cent to $8,646. ZeroHedge stated that in percentage terms this was the best start to the year ever registered for the most important crypto currency. The blog “CoinTelegraph” stated that derivatives trading is likely to reach new records this month and that the volume of open interest is rising strongly. No wonder, the CME Group – the world’s largest derivatives exchange in Chicago – had recently launched options on BTC, following its competitor FTX. All in all, the market is hoping for continued recognition of the cryptos by institutional investors, and thus for a virtual knighthood in the financial world. Let’s wait and see.

What the day brings

The diary is quite sparse today. You can find the overview here: Market Mover
The Bundesbank’s January monthly report is due at 12.00 noon.

And at 14.00 the International Monetary Fund gives its outlook.

Wall Street remains closed for Martin Luther King Day.

The Bernstein Bank wishes successful trades and a good start to the week!

Important Notes on This Publication:

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

Probably not. The stock markets are hitting another historic high, while the US dollar is strengthening against the Japanese Yen and making an eight-month high. The selling season in the U.S. was in normal rhythm. Despite the slowdown in wage growth, consumer spending increased by 0.3% in December.
Whatever these reports are, you still can’t ignore the problems with sales during the holiday season. Trade wars, tense situation in the Middle East can make 2020 a very difficult year for trade.

Chart of the day USD Index

But the US government and the Fed have prepared many more surprises this year. Some are promising tax cuts that will fuel the rally in the market, while others are very optimistic about the prospects for labor and real estate. The first phase of U.S.-China trade relations has already been signed, although it is not enough to ease trade tension. Investors hope that markets will be able to breathe a little calmer in the next few months, while the US and China will be able to negotiate further. One thing to say is that the U.S. government and the Fed are very eager to see a strong economy in their country and are doing their best to make it happen as soon as possible.

EURO

Euro’s not going anywhere in a hurry. Chatter in a narrow range does not give a reason to see any emerging trend. The U.S. dollar ended the week on a positive note and showed good growth, although the fundamental data on the U.S. did not meet the expectations of the market. This week is likely to pass for the Euro in a narrow range between 1.1060 – 1.1200

GOLD

Gold is still an insurance policy for big investors. The increasing politicization of large central banks makes us think about the future of world currencies. It is already clear that the U.S. government will gradually devalue its own currency, and the price of gold is tied to the dollar, which will certainly lead to an increase in the price of the metal.

What’s waiting for us today?

02.30 Decision of the People’s Bank of China on interest rate
05.30 Industrial production in Japan for November since the beginning of the year
08.00 Producer price index in Germany 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.

17.01.2020 – Daily Report. You probably already guessed it: Wall Street has already marked new highs. And now the DAX is also awakening – in Frankfurt the all-time high is finally within reach. Meanwhile, its little brother, the MDAX, is already showing what a storm at the top looks like.

A party for the bulls

Bullish news everywhere: The first part of the trade agreement between China and the USA is in the bag. Yesterday the US Senate also waved through an important free trade agreement. The Chinese economy is growing within the corridor envisaged by the government. The balance sheet figures of American high-tech and financial groups have been strong so far. Global trade is applauding. The odd small drop of bitterness from the American old economy has hardly curbed investors’ appetite for shares.

DAX lurks – MDAX at record high

As a result, the DAX climbed to 13,556 points on Friday afternoon, and was recently up 0.7 percent to 13,524 points. This brings the all-time high of 13,596 points from January 2018 back into view. We are curious to see whether the German stock market will now finally put the stagnation of the past few days behind it. Meanwhile, the MDAX moved to a new all-time high of 28,705 points on Friday morning. Most recently, the index of medium-sized shares remained in the profit zone at 28,682 digits, up 0.4 percent.

Optimism in Asia

Investors in Asia also showed courage: the Nikkei closed with a plus of 0.5 percent at 24,041 points. Here, the weaker yen and hopes of an upturn in global demand led to a 15-month high. In China, the CSI-300 rose by only a moderate 0.1 percent to 4,155. The Chinese economy grew by 6.1 percent in 2019, in line with government and analyst forecasts. However, this was the weakest growth since 1990, with brokers expressing hope that the bottom has now been reached in industrial production and retail trade.

The Trump bull market continues

Right here, right now: If you want to trade CFDs or online shares on the long side, you can’t avoid the US stock exchange at the moment. President Donald Trump scored another success after the China deal: the Senate approved the USMCA trade agreement with Mexico and Canada. As a result, all the major indices reached new highs in the bull market that has been going on for weeks now. The Dow rose by 0.9 percent to 29,298 points, the S&P 500 rose by 0.8 percent to 3,317 points. And the Nasdaq 100 climbed 1 percent to 9,125 points.

Investors also rewarded the company figures, which have so far been predominantly positive. Alphabet achieved a market capitalisation of over USD 1 trillion for the first time. The stock thus caught up with Apple, Microsoft and Amazon. In the banking sector, Morgan Stanley’s figures were convincing, with the share climbing 6.6 percent. In contrast, Alcoa disappointed, the stock slipped by 11.9 percent.

The upside-down world in Turkey

Meanwhile, traders in EURTRY rubbed their eyes in amazement: Yesterday the Turkish central bank lowered the 1-week repo rate from 12 to 11.25 percent. Analysts had expected this step. Thus the real interest rate adjusted around the inflation rate slipped with minus 0,6 per cent into the negative zone. Interestingly enough, the lira nevertheless rose against the euro – from 6.57 to 6.53. Analysts from Rabobank explained this by saying that the central bank had avoided a surprise. Nevertheless, the bank remains bearish, as urgently needed structural reforms are still pending.

What the day brings

Friday again brings some interesting dates – so you should make sure that your direct market access is open. As always, you can find the overview here: Market Mover
For example, at 02:30pm the American building permits for December are announced.
Shortly thereafter, at 03:15pm US industrial production for December is published
At the same time, the capacity utilization in December is reported.
And at 04:00pm the consumer confidence of the University of Michigan in January will follow.
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.

The news has come out that the U.S. and China have signed the first phase of the trade agreement. That is, the whole deal is still not in place. So far, we are talking about import conditions and customs duties on goods worth $250 million. Who was involved in signing the contract?

The S&P500 chart of the day

Not the leader of the People’s Republic of China or even the Prime Minister, on the Chinese side, but just the Deputy Prime Minister. Well, he’s no equal to Donald Trump, not only by the standards of diplomacy, but also by simple human logic. The American president’s time is running out. There’s an election coming up and now he’s not like a hunter, he’s like a negotiation victim.

THE S&P 500

The American market does not even try to understand such details (relations between Trump and Chinese leaders). Having received the positive news, it continues to grow, showing the next historical peaks. The situation is repeating from year to year. Everybody is waiting for the crisis, and it keeps not coming. Everybody tries to short stock and then escapes from the shorts.
Against this backdrop, the DAX30 seems to be lagging behind. As we noted in recent reviews, investors are looking more negatively at the prospects of the European market.

Swiss franc

Thursday was another interesting day for the franc. Despite the huge positive sign of the US-China agreement, the pair showed a new low at 0.961. However, at some point the profit taking started. If on Friday the growth trend of the pair continues, we may see the minimum of the 1st quarter.

What is waiting for us today?

03.00 GDP data for the 4th quarter in China.
10.30 UK retail sales level for December
14.30 Started house-building data for December in the United States
16.00 University of Michigan USA Consumer Confidence Index 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.