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!
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