News

Yet again, the US and Chinese leaders have failed our expectations. No trade agreement was signed, and the representatives of China have stated that a new round of talks is needed. Markets have reacted with a fall, dragging oil prices with them.

DAX30 Tages-Chart

EURUSD

In the absence of any major news, the Forex market remained stable. Euro closed at almost the same level as last Friday. Investors are waiting for clearer signals to understand what the mid-term trend will be.
The pound failed to build on its success in the previous 2 trading days and lost over 1 point. Speculators decided to take their profits in advance of the upcoming round of Brexit talks.

GOLD

Gold is up, as expected, but still below the psychologically important mark of $1500 per troy ounce. The price is currently flat with the daily volatility range decreasing. As we pointed out last week, speculators are waiting for a powerful breakout from the channel to join the action.

INDICES

At the start of the trading session, stock markets fell a bit. Nevertheless, by Monday evening, most of the fall had been bought out. Since there’s still hope for a peaceful conclusion to the US-China trade war, investors aren’t in any rush to sell their stocks in preparation for the Christmas rally, which is only a couple months away.

What’s next?

2.30 am A statement by the Governor of the Bank of Japan Haruhiko Kuroda
3:30 am Minutes of Reserve Bank of Australia’s latest session
10:30 am Chinese consumer price index for September
10:30 am UK unemployment and wages data
11:00 German ZEW Indicator of Economic Sentiment

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.

14.10.2019 – Special Report. Great pleasure on Wall Street, in Frankfurt and on the Asian stock exchanges: China and the USA have agreed on a minimum consensus in the customs dispute. So far so good – first of all the escalation spiral has stopped. But a closer look at the problems postponed into the future by Friday’s lean deal shows that new turbulences are inevitable.

First skepticism after the rally for hope

How were Wall Street and the German Stock Exchange cheering on Friday. Asia also made gains on Monday. But the first disillusionment set in on the Frankfurt floor at the beginning of the week. And for good reason. For now, after the smoke has gone from the bonfire, it becomes clear that nothing is actually clear.

That’s Phase 1.

First of all, the partial agreement of Friday still has to be signed. “Phase 1” of a major agreement includes intellectual property protection, financial services and monetary issues, US President Donald Trump said on Friday at a meeting with Chinese Vice Prime Minister and chief negotiator Liu He at the White House. If this partial deal really happens, this would be the biggest step in the two countries’ trade dispute over the past 15 months.

Sanctions spiral stopped for now

The most important thing from Friday’s deal: the increase in US punitive customs from 25 to 30 percent for Chinese imports worth 250 billion US dollars, which was actually planned for tomorrow, has been suspended. This will put a stop to the spiral of action and reaction. And the sentiment now seems to be improving again.

No real concession from Beijing

In return for the canceled sanctions, China undertook to purchase 40 to 50 billion dollars from American farmers, mainly pork and soybeans, which are used as animal feed. But this is not a real willingness to compromise. Rather, the Chinese farmers must now urgently push the breeding of piglets with increased fattening, because in the People’s Republic the swine fever rages and meat prices explode. So China acted out of self-interest. Moreover, according to Trump, Beijing did not keep to agro-purchases it had already promised months ago.

Vague details and unanswered questions

All details of the partial deal are otherwise quite vague, Goldman Sachs commented. All we know, too, is that US financial services providers should now have easier access to the Chinese market, probably without a domestic joint venture partner. But it is hard to believe that Beijing will stop manipulating the yuan downwards or copying foreign technology in reverse engineering. This is the Chinese business model that has brought prosperity to the country. By the way, the partial agreement does not deal with the Chinese telecommunications group Huawei either.

First showdown in mid-November

Trump also stressed on Friday that it would take three to five weeks until the now highly acclaimed partial agreement was signed. This is likely to be the outcome of the APEC summit in Santiago de Chile in mid-November. In about a month’s time it will be particularly exciting on Wall Street, in the DAX, on the dollar and on US government bonds.

Tension guaranteed until the end of the year

And the debate only becomes really interesting at the crucial points of industrial espionage, subsidies and industrial policy, i.e. preference for domestic companies, for example in the case of Chinese government orders. These really hard nuts – they are also part of the Chinese modus operandi and are actually non-negotiable for Beijing – must be clarified in a second and possibly third phase.
This also brings the mid-December date into focus. In addition to the already existing customs and the return of the postponed duties, the USA is keeping another threat in its hands: in mid-December, 15 percent punitive customs are to be levied on consumer goods from China worth around 160 billion US dollars.
Goldman Sachs noted that in view of the complex issues in Phase 2, a solution can be expected by the next customs round, if at all shortly before the deadline of 15 December. Especially as the next meeting of the Federal Open Market Committee is scheduled for 10 and 11 December. In view of the Christmas holidays, it was also possible to postpone the next customs increase at the beginning of 2020.

Short: New disappointments

Our conclusion: The lean “Skinny Deal” on Friday gives new hope for a recovery of the world economy. But this hope is only the opium on which the world’s stock markets are climbing – Hopium, as some US financial media aptly commented. The rush quickly fades away and the withdrawal symptoms set in. This short phase could now be imminent. In addition, a complete failure of the negotiations and an open trade war are still possible at any time. If you trade CFDs, these would be the Wall Street, DAX, or Dollar Short candidates. The safe havens would then be US Treasuries, Gold or the Yen.

Long: USA or China are buckling

It would be possible, of course, that Trump, because of the presidential election, that a rising stock exchange is more important than a genuine, comprehensive customs deal, which he had already promised before. Or China might collapse because the economy is hit hard by the existing customs. Then equities in global trade and the dollar should move up. Mirrored would be US bonds gold or the Yen sales candidates.

Only the volatility seems certain

However, since Donald Trump’s possible tweet tirades or the Chinese’s broken promises are both directional and timing challenges, a vola trade might be more appropriate. Because the only thing that seems to be guaranteed is fluctuating prices until mid-December. Which might make VDAX or VIX interesting candidates.

Bernstein-Bank wishes you successful investments!

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.

14.10.2019 – Daily Report. New skepticism or profit taking? After the rally on Friday, the DAX resets at the beginning of the week. In fact, even the partial deal in the customs dispute between Beijing and Washington is not yet dry. Not to mention a comprehensive agreement. There are new doubts about Brexit as well. After all, the Fed is supporting the market.

Frankfurt resigns

Investors on the German stock exchange have started the week with sales. In early trading, the DAX was 0.4 percent weaker at 12,460 points.

On Friday, the leading index had risen by almost 3 percent in the course of the partial deal between China and the USA in the customs dispute. The stock market indicator thus jumped above the 12,500 mark for the first time since July. A brief look at the chart analysis: The DAX has torn a gap at 12,200 points, which is crying out for closure.

Bull market in Asia and on Wall Street

In fact, after the partial deal between China and the USA, the world’s stock market players first breathed a sigh of relief. “Phase 1” of a major agreement included intellectual property protection, financial services and currency issues, Trump said on Friday at a meeting with Chinese Vice Prime Minister and chief negotiator Liu He at the White House. However, according to Trump, it will take three to five weeks for the agreement to be signed.
In China, however, the CSI-300 gained 1.1 percent to 3,953 points. Japan could not react, the stock market remained closed because of the Day of Sports.

On Friday, the Dow Jones had risen by 1.2 percent to just under 26,817 points. After the third winning day in a row, the weekly gain was 0.9 percent. The S&P 500 gained 1.1 percent to 2,970 points on Friday. And the Nasdaq 100 advanced by 1.3 percent to 7,844 points. All important US indices have ruptured with the rally of hope on Friday, which now want to be filled again.

New Brexit concerns

Meanwhile, the British pound has retreated from its three-month high against the dollar, which it marked last week. The Wall Street Journal reported that EU and UK negotiators failed to make a breakthrough on Sunday evening. In view of the insurmountable differences, even a rough framework for an agreement is questionable. One of the sticking points is the open border between the Republic of Ireland and Northern Ireland. Irish Foreign Minister Simon Coveney said in Luxembourg on Monday that a deal was possible this week – but that was not the point.

Silent support from the Fed

By the way, the Federal Reserve will again support the American interbank market starting tomorrow: the Fed wants to buy an additional 60 billion dollars in Treasury Bills. However, the Federal Reserve sees the move as a purely technical matter and not as Quantitative Easing IV. The Fed is thus supporting the overnight market at banks, which suddenly dried up in mid-September, calming the nerves of Wall Street and supporting the prices of US bonds.

This is what the day brings

The appointment calendar on Monday is only sparsely filled. As always, you will find the overview 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.

Friday was filled with important events. It all began the night before with an explosion on an Iranian oil tanker in the Gulf. Later, as the day progressed, there was positive dynamics from both the British pound and the US-China talks.

DAX30 DAILY CHART

EURUSD

Euro continued its growth, spurred by the Fed’s announcement of a new round of asset buying that isn’t formally considered as such. Despite these intricacies, everyone realizes that fresh billions of dollars will soon flood the market, pushing down the interest rate for the US treasury bonds.
The pound has grown by 2 more points, getting very close to the 1.27 mark. Investors are ever more certain that there won’t be a no-deal Brexit at the end of October – or that a new compromise with the EU will be found, delaying Brexit once again.

GOLD

Gold is down for the second day in a row. The main cause are the rumors of successful talks between the US and China. It’s possible that the trade war will end upon mutually satisfying terms.

INDICES

Driven by the same rumor, stocks and risky assets both went up. The important thing now is that Trump doesn’t delude investors once again, in which case severe disappointment would push them to close a lot of previously opened positions as early as on Monday.

What’s next?

We’re not expecting any major macroeconomic news on Monday. Instead, all attention will be focused on the US and Chinese statements after the end of this weekend’s talks.

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.

11.10.2019 – Daily Report. The US president raises the market. Positive signals in the customs dispute between China and the USA also provide new hope on the Frankfurt floor.

Traders and investors hope for a partial deal

The stock market in Frankfurt has accessed the early Friday trading again: The DAX climbed by around 1 percent to 12,284 positions. No wonder, the day before US President Donald Trump had fired the hopes in the customs dispute, which had previously evaporated so strongly, on again. Even a positive atmospheric signal from both sides or a partial deal could prevent the USA from stopping the already planned next round of sanctions next Tuesday.

Trump pushes the stock market

The negotiations went “really well,” Trump said on Thursday evening (local time) in Washington. He didn’t get any more concrete. But above all a tweet shook the financial market yesterday: “Big day of negotiations with China. They want to make a deal, but do I? I meet with the Vice Premier tomorrow at The White House.” This put an end to the fears, which had been fired up by the official Chinese media, that Liu He would leave early and that both sides basically had nothing to say to each other.

US Treasuries and Dollar Down, Oil Up

This led to an increase in oil prices. The market hopes that the global economy will pick up if the two world economies do reach an agreement. In return, the safe haven of US Treausuries came under pressure and yields rose. The falling risk aversion also affected the dollar, as the Fed may not be loosening monetary policy too much; EURUSD rose slightly to 1.1015 dollars. After a brief reset, gold remained surprisingly stable at over $1,500 – we had reported here on the buying frenzy of large central banks.

Asian stock markets gain

Meanwhile, shareholders in Asia seized the opportunity in the morning. The Chinese CSI-300 rose by about 1 percent to 3,912 positions. On Friday, the Nikkei temporarily climbed to its highest level for a week, closing the day 1.2 percent higher at 21,799 points. And in Hong Kong the Hang Seng recently gained 2.4 percent to 26,314 points. Demonstrators had signaled their willingness to lower their violence in the upcoming protests over the weekend. This in turn would be positive for the customs negotiations, as Trump had linked the two issues.

Winnings in New York

The bulls were also in charge on Wall Street yesterday. The Dow Jones Industrial temporarily rose by almost 1 percent to around 26,600 points, but by the end of the day there was only a gain of 0.6 percent to 26,497 points. The market-wide S&P 500 also rose by 0.6 percent to 2938 points. The Nasdaq Composite gained 0.6 percent to 7,951 points. Initial applications for unemployment benefits were hardly a factor in trading. As always, you will find an overview here: Market Mover

Wall Street before the decision on direction

Short note on the chart analysis: The Nasdaq Composite is currently in no man’s land between the 50-day moving average and the 200-day line. This is not by chance, because the two main news topics China and monetary policy are particularly important for high-tech companies. A breakout would therefore be an important signal if you trade CFDs. As always, you should take a close look at the free real-time prices on your trading platform.

This is what the day brings

In customs negotiations, any tweet from Trump can swirl courses around.
Around noon ECB President Mario Draghi could move the market, receiving an honorary doctorate from the Univesita Cattolica del Sacra Cuore in Milan.
At 2:30pm the import and export prices for September are published in the USA.
Otherwise, the consumer mood at the University of Michigan will begin at 4 pm.
And at 7:15pm German time, Boston Fed President Eric Rosengren (FOMC voting) will give a speech at the American Economic Challenges Symposium in Madison.
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.

Today brought a pleasant surprise from the British pound. On Thursday, PM Boris Johnson and his Irish counterpart Leo Varadkar discussed the trickiest customs issues that arise in the context of the Brexit. At the end of the talks, they made a joint statement, saying that a new agreement is indeed possible.

DAX30 DAILY CHART

EURUSD

GBP quickly rose by 2.5 points, followed by EURUSD. The latter pair was also helped by the fact that the US inflation data for September turned out to be worse than expected. This makes euro more attractive, especially since the worst of the European monetary policy easing is already over and has had its impact on the quotes.

GOLD

Gold is down a bit; for the past two months, the precious metal has been oscillating in a corridor that seems quite narrow for 2019. The trading community is waiting for it to exit the corridor from either end. The unusual Q4 stock exchange downturn could act as a catalyzer, driving gold back up. However, as we all know, whenever experts wait for something to happen, what transpires is exactly the opposite. Nobody can find any plausible grounds for a sharp decline in the gold prices, but if it happens, analysts will surely find a good post-factum explanation.

INDICES

The US stock market had fallen before the main session opened, but later rebounded thanks to confident demand by both investors and speculators. The causes that pushed it down so sharply last week are now less relevant; fear is dissolving, making traders recall that a potential pre-New Year rally can still happen.

What’s next?

Friday’s news is bound to be exciting.
At 8 am, German consumer price index data will be published.
At 11:30, President of the European Central Bank Mario Draghi will make a statement.
At 2:30 pm, we’ll learn all CAD speculators’ favorite piece of news – Canadian unemployment data for September.
At 4 pm – and the last important news of the week – the University of Michigan Consumer 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.

10.10.2019 – Daily Report. Hopes of a loosening of US monetary policy are pulling prices higher. But the smoldering customs dispute between Beijing and Washington is slowing the buying mood. The DAX remains moderately positive. The only thing that is clear is that volatility is unlikely to decrease in the near future.

Slight gains in Frankfurt

A test of patience for all those who trade stocks online: It’s not going well. By midday, the DAX was up 0.2 percent at 12,118 points. Yesterday, the German stock market indicator gained a good 1 percent. The day before, the leading German index had fallen below 12,000 points. Good times for all traders trading CFDs: The indecision in the market could make VIX and VDAX exposures interesting.

Will the Fed loosen further?

Many brokers wanted to see a small bullish signal in the Federal Reserve’s latest speech. According to the minutes of the 17th and 18th September interest rate meeting published yesterday evening, some members of the Federal Reserve recently saw growing threats to future economic development in the US. According to members of the Monetary Policy Committee, the risks to the economic outlook have risen somewhat since the July meeting. The main reasons were trade conflicts and the weakening global economy. At the September meeting, the Fed lowered the key interest rate by 0.25 percentage points to a range of 1.75 to 2.00 percent. This was the second rate cut in a row.

Long: Both sides agree

In the case of the customs dispute, investors had to deal with contradictory reports – negotiations in Washington continue today. Yesterday the Financial Times reported that China was offering to buy more American agricultural products. In the future it is expected to be 30 million tons of soybeans per year from the USA – ten million more than before. Bloomberg had also reported that the USA could postpone the tariff increase planned for next week. In return, Washington expects a currency pact. This brought the yuan into the focus of traders. The New York Times had also reported that the Trump administration wants to grant licenses again to some US companies that supply Huawei. This would mean a relaxation of the sanctions against the company. And the US stock exchange should be pleased.

Short: Disappointed hope

However, the official “South China Morning Post” has just reported that the negotiations under the leadership of China’s Deputy Prime Minister Liu He should now only last one day and not least two days until Friday as planned. The reason for the standstill is Beijing’s refusal to discuss the issue of illicit technology transfer. After that, the White House provided reassurance: CNBC reported that there was no information about a change in He’s plans. Later, however, the television station followed up and reported, citing an unnamed source, that everything was in flux: “Maybe Liu He would leave earlier than planned.

Asia and New York in positive territory

Before this back and forth, the Nikkei closed 0.4 percent higher at 21,552 points on Thursday. The Chinese CSI-300 even rose by 0.8 percent to 3,875 points. The evening before, Wall Street had recorded gains. The Dow Jones gained 0.7 percent to 26,346 points. The S&P 500 climbed 0.9 percent to 2,919 points. And on the Nasdaq, the composite gained around 1 percent to 7,903 points.

Turkish stock exchange and lira in crosshairs

Politics also moves courses elsewhere. After Turkey’s invasion of northern Syria, investors should keep an eye on Turkey’s leading index ISE 100 and the Turkish lira. Sanctions by the USA are now possible. Turkey wants to establish a “security zone” on its southern border and settle up to two million Syrian refugees there.

This is what the day brings

The dominant topic remains the customs dispute between China and the USA – be sure to keep your trading platform open and keep an eye on real-time prices. If it turns out that both sides have nothing to say to each other, Wall Street is likely to disappear. Because if there is no progress, Washington is likely to raise tariffs on Chinese imports totaling $250 billion from 25 percent to 30 percent starting next Tuesday. But if an agreement is reached, prices will rise.
Otherwise, the minutes of the meeting of the European Central Bank will be published at 1:30pm, which will bring EURUSD into focus.
At 2:30pm US consumer prices are reported for September, along with real incomes.
It will be exciting for equities, bonds and foreign exchange at 2:30pm when the weekly US initial claims for unemployment benefits come in.
OPEC is also publishing its monthly report.
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 results of the US Federal Open Market Committee meeting, which were highly anticipated by the market since early morning, were published on Wednesday evening. No new announcements on tightening or loosening monetary policy were made.
As a result, there is still a positive mood on the market. The main news of the day is the 5% price increase of the first cryptocurrency.

DAX30 DAILY CHART

EURUSD

During the recent meeting, the directors of the Federal Reserve agreed that the further policy on interest rates is “not set in stone and will depend on the current situation”. Based on that, EURUSD currency pair is trading sideways in the last ten days.

GOLD

Gold price is rising the second day, having its strong support over $1500. The investors hope that the Federal Reserve will start accumulating assets and new liquidity will flow into the market. Gold is the first asset that is expected to rise, because free liquidity should be accumulated somewhere.

INDICES

World stock indexes almost recovered after yesterday’sdrop. The 200 day moving average provides strong support for both S$P500 and DAX. Oil price is rising due to the start of Turkey’s military campaign in Syria.

What’s going to happen today?

Much news and economic data will be coming out tomorrow.
At 10.30 the large portion of Great Britain economic statistics will be released: industrial production, trade balance and GDP.
At 11.30 the head of the Bank of England Mark Carney will speak.
At 13.30 the ECB monetary policy report will be released.
At 14.30 the US CPI (Consumer Price 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.

09.10.2019 – Daily Report. The stock market bulls are tormented with a stream of negative news in the negotiations between China and the USA. Wall Street is going downhill. Nevertheless, the DAX is surprisingly robust on Wednesday morning – thanks to the Federal Reserve.

Fed sends DAX upwards

Investors on the German stock exchange recently showed a spirit of resistance: Attracted by the US futures, the DAX rose by 0.7 percent to 12,056 points. Many brokers hope that the Fed minutes, which will be published in the evening, will give clear indications of a loosening of monetary policy in the USA. On the trading floor, Fed Chairman Jerome Powell also created a better mood: He announced that the US Federal Reserve would buy US Treasuries again in order to prevent further turbulence in the credit market – at this point we had reported on the “Repocalypse” in September. Before the conference of the National Association for Business Economics in Denver, he also hinted at a further step in interest rates.

Trump for Trump

In addition, the Democrats’ impeachment efforts against US President Donald Trump have apparently suffered a severe blow. According to the Washington Examiner, the CIA whistleblower who testified anonymously last Friday to Inspector General Michael Atkinson about Ukraine had a professional relationship or worked for one of the democratic candidates in the 2020 election campaign. Maybe that’s why Trumps Nemesis Adam Schiff (Democrat from California), the head of the House Intelligence Committee, didn’t have the minutes published.

Customs dispute sinking courses

Previously, most of the world’s trade had been submerged. The Japanese Nikkei-225 dropped 0.6 percent to 21,456 points on Wednesday. In China, the CSI-300 held steady at 3,842 with a minimal gain of 0.1 percent. The leading Dow Jones index lost 1.2 percent to 26,164 points at the closing bell on Tuesday. The market-wide S&P 500 slipped by 1.6 percent to 2,893 points to the south. The high-tech index Nasdaq 100 also lost 1.6 percent to 7,604 points. No wonder: yesterday’s news about the China-USA customs dispute was like water torture for all those hoping for an agreement – depressing news kept trickling in.

Washington puts pressure on the red elite

First, the US blacklisted 28 Chinese companies and government organizations for their actions against the Muslim minorities in China. These companies may no longer be supplied from the USA. This affects companies that produce technology for the recognition of history or artificial intelligence. With this the USA once again attacks the need for security of the Chinese leadership, which fears the people’s anger and is currently a little nervous because of the unrest in Hong Kong and in view of drastically rising meat prices in the wake of swine fever.

In addition, the US administration imposed visa restrictions on representatives of the Chinese government and the Communist Party. Beijing strongly condemned this action as interference in China’s internal affairs. The Ministry of Commerce announced that Beijing would take all steps to safeguard its interests, but did not provide any details.

China resists real negotiations

Beijing also managed to lower expectations through its near-state press. The South China Morning Post, referring to the Ministry of Commerce, reported that Deputy Prime Minister Liu He and his delegation would only remain in Washington tomorrow, Thursday and Friday. Referring to an unnamed source, it was said that the scheduled departure date was Saturday. Moreover, according to the South China Morning Post, Liu will not bear the title “Special Envoy” of President Xi Jinping in this 13th round of negotiations. This indicates that the vice-premier did not receive any detailed instructions from the head of state. And the social media channel Taoran Notes, which belongs to the official “Economic Daily”, issued the motto: “talking while fighting”. Which doesn’t look like compromises.

Capital controls and Hong Kong

Finally, the news agency Bloomberg reported that Washington was working on the possibility of making it more difficult for American pension funds to invest in Chinese equities. Such capital controls are likely to hit some Chinese blue chips and the stock markets hard. Trump also reiterated his threat on Monday that any negative action by the Chinese in Hong Kong could influence the negotiations.
This puts the first talks since the negotiations were broken off in May under a conceivably bad star. At the time, the US had accused China of having overturned promises it had already made at the last moment. If there is no progress now, the USA should increase the tariffs for Chinese products worth 250 billion dollars from 25 to 30 percent starting next Tuesday. With foreseeable turbulence for equities, bonds and foreign exchange.

This is what the day brings

Distraction from the Chinese-American dissent brings on Wednesday only few important dates. As always, you will find the overview here: Market Mover

In the USA, wholesale sales figures for August will be published at 4pm.
At the same time the JOLTS job offers are announced.
At 4:30pm the EIA crude oil stock data is reported.
Last but not least at 7:35pm the FOMC minutes of the Fed meeting will be published.
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 latest episode in the never-ending epic of Trump’s negotiations with the Chinese once again pushed the markets down. This was compounded by the fears of Great Britain’s chaotic exit from the EU. Yesterday’s negative news probably won’t have any lasting effect, however, due to the very important news expected on Wednesday. It’s that news that will determine investor’s behavior today.

DAX30 DAILY CHART

EURUSD

EURUSD fell somewhat as investors were trying to flee the risks. After the conversation between Angela Merkel and Boris Johnson, the pound fell much more, dragging euro with it. The politicians can’t seem to find a common ground – and October 31st (the final date for Brexit) draws ever nearer.

GOLD

As we’ve noted yesterday, as investor’s appetite for risk decreased, the price of gold immediately started growing. Investors are correct to think that in the context of a possible fall of exchange indices, the yellow metal will act not only as a safe haven but also a reliably profitable instrument.

INDICES

Global stock indices failed to build on the positive dynamics of the past three days. Today we’ve seen them fall in virtually all American and European markets. From the technical point of view, things don’t look that bad. Both S$P500 and DAX are above the strong level of support formed by the daily MA 200.

What’s going to happen today?

Today is October’s second most important day in terms of news – after the day when US unemployment data was published. At 8 pm, we will find out the results of the US Federal Open Market Committee meeting. The matter of lowering the interest rate has long been decided. What investors want to know is the general tone of the Fed members; experts will scrutinize it for hints (or a lack thereof) of a further easing of the monetary policy.
Furthermore, at 5 pm, after the US stock market opens, the Chair of the Federal Reserve will make another statement. Both events can provoke high volatility.

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.