News

This is going to be a short trading week in the US, and investors will continue watching the news of the US-China tariff negotiations and the latest economic data. Many retail chains in the States aren’t doing so well, despite the Black Friday and the start of the Christmas sales. The last week of November will be distinguished by many economic reports.

Bitcoin day chart

On Friday, Bitcoin fell below the MA 200 line and was trading close to $7300. The test of this support level opens the way towards a further fall to $5000, disappointing crypto enthusiasts. Chinese authorities are putting pressure on crypto owners once again, while miners start to sell off their hardware due the absence of profits. Former market patterns don’t work anymore, and it’s impossible to say if growth will resume in the nearest future.

EUR/USD

After Christine Lagarde’s first speech as the new head of ECB, euro fell to 1.1018. Christine decided to support Mario Draghi, sticking to his relaxed monetary policy. ECB is likely to keep pouring money into the industry, which will affect the price of the euro.

GOLD

The price of gold has consolidated between $1460 and $1479 per ounce. Unless important news on the trading talks appear, investors will remain on standby. The negotiations are fraught with difficulties, however. If there is any chance for a positive outcome, gold is likely stay where it is now.

INDICES

The indices have calmed down a bit by the end of the week. There wasn’t much in terms of important news, so investors prefer to wait. A 2% annual growth in the economy can’t explain such abnormally stock prices. In the future the market will probably react more strongly to all news and return to more reasonable price levels.

What’s next?

11.00 Germany: Ifo business climate index
15.30 Canada: wholesale trade data

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.

22.11.2019 – Special Report. The 12th of December is approaching and with the election of the House of Commons in Great Britain the further course in Brexit will be decided. And thus also for the British pound. Traders should keep an eye on the matter.

Possible Bull-Run at Sterling and Brit Shares

The sky is the limit: If the forecasts are confirmed and the Tories win a phenomenal election, then the Pound Sterling will probably rise against the Euro and Dollar. Prime Minister Boris Johnson has meanwhile signalled that there will be no chaotic Brexit, thus eliminating a fear of the market. And if Labour were to be defeated at the ballot box, he could, from a position of strength, clarify all the details with the European Union without being held back by blockades in the House of Commons. The result should be an economic policy that is favourable to the economy and to the stock markets. This would not only focus on long trades in “Cable”, but would also ultimately delight the cops in FTSE-100. But one after the other.

Left turn from Labor

Neither the Tories nor Labour have officially presented their final election programmes. However, Labour leader Jeremy Corbyn has already announced a drastic increase in social spending and construction programmes. The question is who should pay for this – tax increases and/or higher indebtedness would probably be the result.

Stalinism light in London

The blog Mish Talk, which focuses on the electoral mood on the island, also stated that self-employed people are afraid of Corbyn. Not only business owners, but the entire financial world is apparently raging over Labour’s ideas. As just reported by “The Telegraph”, investors are storming the nationalisation plans of the Labour Party: The Royal Mail, Railways, Waterworks, Energy Utilities and Openreach, that’s the network arm of British Telecom – they’re all on the shopping list of the Left. Commentators have classified the proposals as the sharpest shift to the left in years.

Countering the Tories

Johnson, on the other hand, was poaching in the traditional Labour territory, i.e. among the lower income groups. He announced that if he wins the election, he wants to bring the social security allowances into line with the tax. Currently, workers pay National Insurance contributions if they earn more than £8,632; income tax is only paid from £12,000. The relief for the average worker would be around £4000 per year.

Hardly anyone wants Corbyn

It’s hardly surprising that Boris Johnson scores well with the voters. And Corbyn probably doesn’t do well at all thanks to his soporific functional habitus. Especially since he hasn’t yet made it clear whether he wants the Brexit or not.

The market wants Boris

It is also not surprising that the market has already signalled its preferences. If we look at the opinion polls compiled by MishTalk and oppose a chart of EURGBP, we can see a clear trend: shortly after Johnson was elected prime minister, Sterling has risen against the euro. The correlation between opinion polls and the strength of the pound was also confirmed by analysts at Bayern-LB and Commerzbank.

Economy speaks for the Pound

Economic factors also support the assumption that the pound will continue to rise. The euro is likely to weaken further, as a continuation of the loose monetary policy can be expected under the new ECB head Christine Lagarde. This is also supported by low inflation, which in October was just 0.7 percent in Euroland – the lowest level since November 2016. By comparison, the inflation rate in the current year is likely to just reach the Bank of England’s (BoE) target of 2.0 percent, as the Hamburger Sparkasse recently analyzed. The BoE last raised the key interest rate (bank rate) to 0.75 percent in August 2018. The next interest rate step is to be expected after the Brexit.
On November 7, the EU Commission lowered the GDP growth targets for the Eurozone and the EU as a whole for this year and the next two years. In contrast, the British statistics authority reported on 11 November a plus in gross domestic product of 0.3 percent in the third quarter. This prevented the island’s economy from slipping into recession, having contracted by 0.2 percent in the second quarter.

Bear scenario for Sterling

But it is by no means certain that Sterling will take off. On the one hand, because there are still about three weeks to go before the election. Furthermore, the conservatives could be forced to form a coalition government, which would dilute the share price. There is also the threat of a new Brexit referendum, which could ultimately knock everything down. And since the market doesn’t like uncertainty, Sterling and the London Stock Exchange are likely to disappear again. Especially since, according to Haspa, the BoE is likely to react to the “no deal” with a rapid cut in the key interest rate in order to mitigate the expected economic slump. And then there are the Scots: There is the threat of another referendum on the withdrawal from the United Kingdom.
As you can see, it remains exciting. If you trade stocks or CFDs online, you have to keep an eye on all the events surrounding the topic on your trading platform. The Bernstein Bank wishes you successful trades!

Important Notes on This Publication:

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

22.11.2019 – Daily Report. Wall Street corrects slightly. But the DAX is picking up in early trading. Brokers are looking to moderately positive economic data from Germany. Meanwhile, little is happening in the customs dispute between China and the USA.

Frankfurt attracts

The stock market players on the German stock market recently positioned themselves on the bullish side. The DAX climbed by 0.7 percent to 13,232 positions. The Federal Statistical Office confirmed an earlier estimate that the German economy has narrowly escaped the recession thanks to the robust domestic market and rising exports. Gross domestic product (GDP) grew by 0.1 percent between July and September compared with the previous quarter. In the second quarter, GDP had shrunk by 0.2 percent, while in the first quarter it had risen by 0.5 percent. On the currency market, traders were waiting for the first programmatic speech by the new head of the European Central Bank, Christine Largarde.

Ping-Pong in the customs dispute

The uncertainty surrounding the customs dispute between China and the USA continued to be the determining issue. The stock market was torn back and forth by conflicting reports. China’s President Xi Jinping said on Friday that his country was interested in an agreement. Beijing is trying to avoid a trade war, but is not afraid to strike back if necessary.
Meanwhile, the official “South China Morning Post” warned of consequences if US President Donald Trump signs the US Congress’ Pro Hong Kong bill. And the influential editor-in-chief of the Communist-linked Global Times, Hu Xijin, tweeted yesterday that US farmers should better wait with the purchase of larger tractors – that would be safer in six months. Purchases in US agriculture are a core demand of the US administration. Yesterday, the Wall Street Journal also reported that China had invited a high-ranking US delegation to Beijing for negotiations, which could take place before Thanksgiving next Thursday.

Mixed picture in Asia

Nevertheless, Chinese equities declined. The CSI-300 with the most important red chips of the People’s Republic lost about 1 percent to 3,850 points. Brokers cited as the reason the passage of two Chinese warships off islands in the South China Sea, which had been
Beijing will be complained of. Investors fear that this demonstration of power could fuel the trade conflict again. Meanwhile, the Nikkei rose by 0.3 percent to 23,113 points.

Vietnam replaces China

China would have good reason to conclude an agreement with the USA. After all, the American industry is in the process of looking for new suppliers. CNBC, for example, reported a strong increase in imports from Vietnam of around 35 percent for the first nine months of the year. Demand was particularly strong for computers and telephony equipment. In the same period, imports from China fell by around 14 percent, as the figures from the management consultancy Markit show.

New York hesitates

The brokers had previously held back on Wall Street. The Dow Jones Industrial fell by 0.2 percent to 27,766 points on Thursday. The S&P 500 also lost around 0.2 percent to 3,104 points. The Nasdaq 100 also fell by 0.2 percent to 8,266 points.
Mixed US economic data left investors cold. The Philly Fed index in November was better than most economists had expected. The number of first weekly applications for unemployment benefits was robust. By contrast, the composite index of leading economic indicators slipped in October for the third consecutive month. And sales of second-hand real estate in October were somewhat weaker than had been hoped. As always, you can find the overview here: Market Mover

That’s what the day brings

The schedule before the weekend is rather thin.
The consumer confidence of the University of Michigan is supposed to arrive at 4:00pm.
The “Frankfurt European Banking Congress” will be attended by ECB President Christine Lagarde and Federal Finance Minister Olaf Scholz, among others.
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.

According to US media, China has invited its American partners to a new round of talks. Previously, White House insiders stated that any serious decision-making could be postponed till early 2020. The protracted negotiations are having a negative impact on the global economy, making the markets nervous.

Bitcoin day chart

Oil demonstrated strong growth on Thursday, rising by over 2% following the news that the OPEC could extend its production cuts till mid-2020. The demand for oil directly depends on the global GDP growth rate, so any further increases in price will largely depend on the resolution of the current international issues, including the US-China trade deal.

EUR/USD

Many in Europe are saying that the ECB is planning to lower the key interest rates again — twice, in fact. Considering that it’s already negative, the pressure on European banks and on the euro can only grow. On Thursday, euro was trading in the red at 1.1060.

GOLD

Gold seems to have lost its upward momentum. The uncertainty that’s reigning on the market doesn’t give bulls any good reasons to keep buying. On Thursday, the precious metal underwent a correction down to $1460 per ounce.

INDICES

For the third day in a row, global markets are down following the latest negative twist in the China-US tariff negotiations. This could be just a breather preceding a Christmas rally, though. Considering that the main US indices have repeatedly set new historical records this month, it’s not surprising that investors are closing positions and take a pause before entering the market again.

What’s next?

9.00 — Germany: GDP data
10.15 – France: manufacture & services business activity index
10.30 – Germany: manufacture & services business activity index
10.30 – A speech by ECB President Christine Lagarde
11.30 – UK: manufacture & services business activity 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.

21.11.2019 – Daily Report. Now they are being tortured again: The shareholders in global trade are exposed to a constant trickle of dripping negative news in the customs dispute. And in between there are small pauses with positive news, which make the pain go away. The stock market in Frankfurt is still moderately sceptical.

Losses for the DAX

Investors in Frankfurt have played it safe for now. In early Thursday trading, the German leading index fell back to 13,046 and recovered to 13,134 points, which meant a minus of 0.2 percent. The course reflects the changing messages in the tariff dispute between China and the USA again.

Asian stock markets in the red

Investors in Asia had previously held back. For example, the Chinese CSI-300 reset 0.5 percent to around 3,890 points in the morning. In Tokyo, the Nikkei also lost 0.5 percent to 23,038 points. Hang Seng also fell by 1.6 percent to 26,467 points in view of the ongoing protests.

Positive aspects in the customs dispute

Drip, drip, drip – always on the same spot on the head. Where the brain makes the decisions for stock exchange wheels. Just now there was a break from the agony, because China partially caught the negative news from yesterday again. Today, Thursday, Gao Feng, spokesman for the Chinese Ministry of Commerce in Beijing, said China was willing to negotiate a Phase 1 agreement with the US on the basis of mutual respect. Then the spokesman rejected “external rumours” as false, adding that delegations from both sides remained in close communication, CNBC reported.

Negatives aspects in the customs dispute

The official thus apparently referred to a report by Reuters from the previous day. According to the news agency, Phase 1 could well slide into next year, citing insiders from the White House. Beijing is pushing for a stronger rollback of the existing punitive tariffs, while the Trump administration is countering with new demands on its part. Moreover, US President Donald Trump said to journalists in Texas, “I don’t think they’re stepping up to the level that I want. According to Reuters, President and US Trade Representative Robert Lighthizer do not consider a rollback of the punitive tariffs a good idea unless the issues of intellectual property and technology transfer have been clarified. The Wall Street Journal also added that Trump had criticized China during a visit to an Apple factory in Austin.

Positive aspects in the customs dispute

Also on Wednesday, Chinese negotiator Deputy Prime Minister Liu He said at a Bloomberg event that he was cautiously optimistic about a Phase 1 deal. And with that, the politician had at least curbed Wall Street’s losses. In addition, Liu had been confused about the US demands in a conversation with a guest, but was confident about the conclusion of the partial deal. Chinese officials had also expressed the suspicion that such a deal could be signed in early December.

Negative aspects in the customs dispute

The question remains how Beijing will react if Trump signs the Senate’s Hong Kong bill. China had threatened “countermeasures” in this case. The US Congress demonstratively backed the democracy movement in China’s Hong Kong Special Administrative Region. Trump has repeatedly linked the protests to the customs dispute.

New York in Minus

Investors in the U.S. were pushing the sell button in the face of yesterday’s back and forth. The Dow Jones Industrial, for example, fell by just under one percent in the course of the day, but at least it dampened its losses in late trading. In the end, the Dow slipped by 0.4 percent to 27,821 points at the closing bell. The S&P 500 also fell by 0.4 percent to 3,108 points. And the Nasdaq 100 lost 0.7 percent to 8,283 points. On the previous three trading days, the leading indices had all set new highs.

Fed pauses as expected

Meanwhile, the Federal Reserve did not report anything new and again sent signals for a pause in interest rates. According to Fed reports released yesterday, interest rates are “well aligned” after the recent cut. However, some Fed decision-makers believe in “high downside risks” for the economy.

This is what the day brings

A bit of distraction from the Beijing-Washington pickaxe could bring new economic data on Thursday.
EURUSD and Bonds will be in for a thrill at 1:30pm when the ECB minutes are released. In a bizarre speech yesterday, the ECB of all companies warned of the risks posed by the zero interest rate.
At 2:30pm the weekly first applications for unemployment assistance arrive in the USA.
Ditto the Philly Fed for November.
At 4:00pm the US early indicators are announced for October.
At the same time, consumer confidence in the euro zone will also be published for November.
As always, the calendar can be found here: Market Mover
The Bernstein Bank wishes you successful trades!

Important Notes on This Publication:

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

The relations between the United States and the PRC keep getting worse. China protested against the Senate passing several laws aimed at protecting human rights in Hong Kong. Donald Trump insists that the agreement must be signed on the “as is” basis. The whole deal is under question, and the markets are reacting accordingly.

S&P500 day chart

Oil was the biggest winner on Wednesday, after the publication of the data on the crude reserves in the US. They turned out to be smaller than expected, causing Brent to grow by 3% on Wednesday to $62.5 per barrel.

EUR/USD

Euro is waiting for the FOMC session minutes to be published, as well as for fresh data on German GDP. The head of ECB will give a speech on Friday, expected to clarify the European Central Bank’s further policy. Euro has hardly moved on Wednesday, trading at 1.1070.

GOLD

Throughout Wednesday, the price of gold remained steady, waiting for the FOMC minutes. The safe haven asset is still attractive to investors: the rocky trade negotiations between China and the US are creating a growth in demand. Gold is now trading at $1470 per ounce.

INDICES

Following Trump’s statements and China’s negative reaction to them, almost all global indices were trading in the red. The markets tend to react very anxiously to such declarations by political leaders. S&P500 is down to 3090, Dow Jones to 27740, while DAX is trading at 13158.

What’s next?

14.30 ECB session minutes
16.30 The Federal Bank of Philadelphia’s business growth indes
17.00 US: secondary housing market stats

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.

20.11.2019 – Daily Report. The German stock market is going downhill: Investors are shocked by threats in the customs dispute by US President Donald Trump. And the Chinese reaction to a US Senate resolution on Hong Kong. There were also disappointments in the US reporting season. To make matters worse, the European Central Bank (ECB) is also warning of risks.

Frankfurt disappears

The cocktail of negative news overturned the DAX on Wednesday morning: The leading index fell 1.1 percent to 13,081 points. The day before, it had reached a new high for the year of 13,367. Investors recently preferred to flee to safe havens. Gold rose by 0.4 percent to a two-week high of 1479 dollars per troy ounce. Bonds were also in demand, and the yield on ten-year German government bonds slipped to minus 0.384 percent. This was the lowest level for almost three weeks.

Warning from the ECB

Investors were shocked by a warning from the European monetary authorities. In view of the continuing economic weakness and ultra-low interest rates, the ECB sees dangers for the stability of the financial system in the euro zone. On the one hand, the low interest rates supported the economy, ECB Vice-President Luis de Guindos said when presenting the half-yearly stability report. A resulting increase in risk appetite could, however, create problems for financial stability in the medium term. The ECB referred to the high debt levels and budget deficits in some euro countries. EURUSD was quoted at 1.106.

Shrill tones in the customs dispute

In addition, investors were now more sceptical about the opportunities in the Chinese-U.S. customs dispute. Trump said yesterday on the sidelines of a White House cabinet meeting: “If we don’t make a deal with China, I will only raise tariffs further. Meanwhile, the Wall Street Journal reported that both sides disagreed on key issues. These include Washington’s demand for Chinese purchases from US farmers. And the Chinese demand to eliminate punitive tariffs.
Beijing also reacted angrily to a bill by the US Senate to support the Hong Kong democracy movement. The chamber wants to prohibit the export of tear gas, rubber bullets, water cannons and handcuffs to Hong Kong police. Beijing spokesman Geng Shuang criticized the decisions as “blatant interference in internal affairs”.

Asia stock exchanges with losses

Investors in Asia first sold their shares. In Tokyo, the Nikkei 225 closed 0.6 percent lower at 23,148 positions. The Chinese CSI-300 fell by 1 percent to 3,908 points.

New York is turning around

The brokers on Wall Street had broken another record run at the standard values the evening before. The Dow Jones finally closed with a minus of 0.4 percent at 27,934 points. The S&P 500 lost 0.1 percent to 3,120 points. A weak outlook from the Home Depot DIY chain and a profit warning from the Kohl’s department store chain caused the stock to fall by one-fifth. Meanwhile, the Nasdaq 100 set a new final record with a plus of 0.1 percent to 8,339 points. At the start of trading, the Dow, S&P 500 and Nasdaq 100 had again achieved highs.
Economic data was mixed: The number of housing starts in October had climbed less strongly than had been hoped. Building permits, on the other hand, had surprisingly risen to a twelve-year high.

New alluvial signal for crude oil

Meanwhile, the bear markets in the oil market were pleased with a surprisingly strong increase in US oil stocks. WTI held a moderate minus of 53.33 dollars, Brent of 60.89 dollars. Since the beginning of the week, the minus has added up to around four percent. According to data from the private provider API, weekly US inventories climbed by 6 million barrels – most analysts had only expected a plus of 1.5 million barrels.

Tension at Sterling

Meanwhile, forex traders are focusing their attention on the UK election on December 12th. EURGBP remained at 0.8569. Boris Johnson won the first TV duel by a narrow margin, scoring 51 percent according to YouGov, with more than 1,000 viewers surveyed. His adversary Jeremy Corbyn came in at 49 percent. And this despite the fact that the pale Labour functionary continued to ramble on the question of whether he was actually pro or contra Brexit. According to recent polls, the Tories are about 10 percentage points ahead of Labour.

That’s what the day brings

The most important event will be the publication of the Fed minutes of 29 and 30 October at 8:00pm. This is likely to indicate that the Federal Reserve is waiting with further monetary policy steps for the time being.
In addition, the state oil report is due at 2:30pm.

As always, you can see the complete schedule here:: Market Mover

The Bernstein Bank wishes you successful trades!

Important Notes on This Publication:

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

Will China and the US be able to sign a deal? On Tuesday, Trump said that if China decides not to go forward with the agreement, he will simply raise the tariffs, stating that China must accept the terms offered to it. After these severe words, Dow Jones went down by 0.4% , while S&P500 lost all of Tuesday’s gains. Considering how nervous investors are, the indices are likely to fall even more.

DAX day chart

Bitcoin is ready to test $8000. Nobody seems to be interested in buying. During such protracted slumps, large players usually open positions. Bitcoin can suddently shoot up at any moment once it gets close to this important price level.

EUR/USD

The ongoing uncertainty in the US economy and less-than-great statistical data are causing the USD to weaken. Euro, by contrast, got stronger, growing to 1.1080. But a single negative piece of news could reverse the movement, causing the price of the euro to fall again.

GOLD

On Tuesday, gold oscillated within a narrow channel due to the absence of major news. The UK is actively buying gold to hedge itself against the uncertainty surrounding Brexit and weak pound. In the context of the growing risks, investors are waiting for new buy signals.

INDICES

Trump has created a lot of anxiety with his strong statements concerning the US-China trade deal. S&P500 is trading at 3118, while Dow Jones reached 27900. European markets are still under pressure from the EU economic uncertainty and showing almost no dynamics. DAX closed at 13212.

What’s next?

11.00 ECB’s financial stability report
17.30 – US crude oil reserves
21.00 – FOMC meeting minutes

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.

Dark clouds are gathering over the US-China trade agreement. The Chinese side is skeptical about the prospects, since Trump is unwilling to rescind part of the tariffs. Negotiations by phone haven’t yielded a result so far. If the relationship between the two states cools further and any negative news emerge, a serious market correction is likely.

GBP/USD day chart

Bitcoin is in the red again. Volatility is decreasing, and BTC is slowly moving towards $8000. Given that the movements are small, it will be difficult to break through that mark. It will take a strong impulse, coupled with large trading volumes, to set a new short-term trend.

EUR/USD

Friday’s statistical data have put pressure on the dollar. Already on Monday, the US currency was losing ground in the European markets. Euro grew to 1.1080 and will probably keep going up. A new round of ECB’s quantitative easing program, as well as reduced industrial production in the US, act as growth drivers for euro.

GOLD

Gold regained some of its positions on Monday, slowly moving towards the important price level of $1500 per ounce. Although some investors have closed their long positions, the demand for gold is still at a record high, so the chances for further growth are very high.

INDICES

No major macroeconomic data were released on Monday, so the markets were left to their own devices. In the absence of news, investors decided to drive the US market to a new all-time high, while the markets in Europe were undecided and ended the session slightly in the red. Now the markets are waiting for decisive results in the trade negotiations between the United States and the PRC.

What’s next?

02.30 Reserve Bank of Australia’ session on the monetary policy
15.30 US: data on construction permits for October

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.

18.11.2019 – Daily Report. Blow-off on Wall Street – hesitation and procrastination in Frankfurt. While the important US indices took off on Friday, the DAX does not dare to leave cover at the beginning of the week. Investors finally want to see a signed agreement between China and the USA.

DAX with handbrake on

Once again the same game on the Frankfurt Stock Exchange: the shareholders ignored the requirements from the USA and remain covered. The DAX remained unchanged at 13,246 points. Some brokers referred to the double high of 13,301 and 13,308 points, which the German benchmark index was better advised to crack convincingly. If this succeeds, the DAX should move to its all-time high of 13,597 points at the beginning of 2018. The scepticism about the still outstanding final partial deal between China and the USA remained high.

Not enough in the trade dispute

On the positive side at the moment, both sides continue to talk to each other – which does not suggest a trade war. The state-run Chinese news agency Xinhua reported that China’s Deputy Prime Minister Liu He, US Finance Minister Steven Mnuchin and US Trade Representative Robert Lighthizer had been on the phone with each other on Saturday. Apparently, however, Beijing first had to accept a request – the phone call was probably made at the request of the Americans.

Asian stock markets attract

Nevertheless, the Chinese stock market took action. The Chinese CSI-300 rose by 0.8 percent to 3,908 points. In addition, a surprising, albeit moderate, interest rate cut by the Chinese National Bank created a good mood. For the first time since October 2015, the People’s Bank of China lowered the reverse repo rate from 2.55 to 2.5 percent. It also pumped over 180 billion yuan or 26 billion dollars into the system. The Hang Seng also climbed 1.4 percent to 26,681 points because a court rejected the current ban on masquerading as unconstitutional. Meanwhile, police have stormed Hong Kong Polytechnic University. In Tokyo, the Nikkei 225 closed about 0.5 percent higher at 23,417 points.

Beijing sells dollar and buys gold

Meanwhile, CNBC referred to an interesting development in China with reference to ANZ Research. Beijing continues to reduce its dependence on the dollar and decoupling will accelerate. Exact holdings are not known, but analysts suspect that China held around 59 percent of its reserves in dollars in June. However, the shopping list is expected to include more sterling, yen and euros in the future. Meanwhile, official gold reserves rose to a record 1,957 tonnes in October.

Dow over 28,000

Wall Street didn’t care – the bull market continued on Friday. Dow Jones Industrial, S&P 500 and Nasdaq Composite all ended the weekend on record highs. Specifically, the Dow Jones gained 0.8 percent to 28,004 points. The Nasdaq Composite rose by 0.7 percent to 8,540 points. And the market-wide S&P 500 gained 0.8 percent to 3,120 points. The statements made by economic advisor Larry Kudlow on Thursday evening, after which the trade talks entered the final phase, were a source of delight – we had reported on this here.

The oil dams are breaking

Meanwhile, Oilprice.com, the industry’s service, was sceptical about the oil bulls before the OPEC+ meeting next month in Vienna. The current production cuts expire in March 2020, but are likely to be extended. Important: The global supply could continue to increase rapidly in 2020 and exceed the increase in consumption. According to new figures from the International Energy Agency (IEA), the non-OPEC offer could increase by an astonishing 2.3 million barrels per day; most estimates are currently at plus 1.2 million barrels per day (mb/d). Not only is the US shale responsible, but also an expected increase in production in Brazil, Norway and Guyana. WTI recently remained unchanged at 57.73 dollars, Brent stagnated at 63.32 dollars.

This is what the day brings

The diary doesn’t bring any really heavyweight events, you’ll find the overview here as always: Market Mover

The Bernstein Bank wishes you successful trades!

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