The Chinese Bulls Can’t Be Stopped

By 25/02/2019News

25/02/2019 – 12:00: Here we go: US President Donald Trump has extended the ceasefire in the Trade War with China after all. On Sunday, Trump announced on Twitter that he would postpone the increase in US punitive tariffs, which will take effect on 1 March, to Chinese imports. This fulfilled the latest hopes of investors, who now of course want more. In accordance to the Chinese equities setting off for a leap of joy, also the DAX wants to go up on Monday morning – it marked a new high for the year.

DAX Conquers New High for the Year

That’s how nice the beginning of the week is for the stock market cops: In the first few minutes of trading, the DAX climbed above the striking barrier of 11,500 points and gained 0.6 percent to 11,529 positions. He then made progress towards this mark. The balance of the past two weeks is therefore impressive, with an increase of just under 6 percent.

Stock Exchange Party in China

The corks popped in China: The CSI300 blue-chip index and the Shanghai Stock Exchange index climbed by more than 5 percent. The Japanese Nikkei ended trading somewhat more cautiously with a plus of 0.5 percent at 21,528 points. Of course, Japanese stocks with strong business ties to China were in demand.

Hole-in-One in Florida

Trump announced a 90-day delay in punitive duties. The US President also announced another summit with Chinese President Xi Jinping and that an agreement would be reached at the Mar-a-Lago Golf Club in Florida if both sides made further progress. He did not mention a date, but according to the US television station CNBC, the end of March is announced. Not a bad idea, he said – finally undisturbed entertainment in the great outdoors. And by the way, push the world’s stock markets for a moment.

Applause on Wall Street

No wonder US futures were also trading in green territory on Monday. At the end of last week, Wall Street had already celebrated the latest developments in the China dispute. For the first time since November, the Dow Jones Index surpassed its stubborn resistance at 26,000 points on Friday. The leading index closed 0.7 percent higher at around 26,032 points. The Nasdaq 100 advanced by as much as 0.9 percent to 7091 points, and the S&P 500 left with a gain of 0.6 percent at 2793 points. Technology stocks such as Apple and Microsoft were particularly in demand on Friday.

Way to Ruin the Party Covestro

The stock market players are thus hoping for a fresh boost for the world’s stock markets and a fresh cure for the global economy through a settlement of the Trade War. Only a few concerns remained in Frankfurt with regard to the German automobile industry because of possible special customs duties in the USA.
The plastics manufacturer Covestro was also not really positive. On Monday, the DAX Group reported a 67 percent decline in earnings to 293 million euros for the fourth quarter. Sales also shrank. The reasons: Stronger competition and increased logistics costs. For 2019 as a whole, the Group had further negative effects in store.
In Europe, the economy will otherwise be looking to Barcelona from Monday onwards, where the trends in the technology sector will be presented at the Mobile World Congress.

Nervous Flutter at the Pound

Nervousness is rising in the currency market about the British pound. According to a report in the Guardian, the European Union is considering postponing Britain’s withdrawal from the EU for two years. Such a hanging game could of course be a challenge for traders in the “Cable”. Actually, the Brexit is scheduled for March 29th and Prime Minister Theresa May recently confirmed several times that she wants to keep this deadline. But there will be no vote in the British Parliament this week on the Brexit agreement negotiated between May and the EU. However, the vote on the next Brexit steps on Wednesday in the London Parliament will remain. Before that, May will make a statement in the House of Commons on Tuesday. Therefore, foreign exchange traders could need strong nerves.

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.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 81% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.