10.02.2020 – Daily Report. The youngest resets doesn’t have to scare the bulls. Not yet. Because Wall Street is lurking among the multiple all-time highs. Even the much weaker DAX is relatively close to the peak. New issues were initially scarce.
Frankfurt Stock Exchange waits
Only a few real financial news items were circulating on the trading floor – only the weather at the start of the week was stormy. So the old topics were the new ones: corona virus, strong US balance sheet season, even stronger labour market data in the US. And a bit of a customs dispute. Everything as usual. So the DAX reacted on Monday afternoon with a 0.4 percent minus at 13,463 points. Last week’s all-time high had been just under 13,600 points. On Monday, US futures also fell by around 0.2 percent.
Corona and no end
The warning from Tedros Adhanom Ghebreyesus, head of the World Health Organisation, caused scepticism. He expressed concern about the cases among people who had not been to China. Perhaps this is just the tip of the iceberg. In fact, the number of deaths has now risen above that of the SARS epidemic in 2002/2003, to over 900. The number of newly detected corona cases has climbed by a good 3,000 to over 40,000.
Warning of oil and copper
The oil and copper markets illustrate that the epidemic will probably cause severe damage to the global economy: unlike the world’s stock exchanges, these are more reliable indicators of the global economy, since there is far more real demand and fewer speculators are active. And both copper and oil are currently in a bear market. WTI slipped below the USD 50 mark (down 0.8 percent to USD 49.90); and Brent lost the same percentage to USD 54. After a slight recovery in recent days, copper fell by 1.3 percent to around USD 5,653.
Small news in the customs dispute
The customs dispute also caused minimal worry lines. Because for economically rather insignificant goods such as steel nails, staples, wire and cable, punitive tariffs came into force in the USA over the weekend.
No clear trend in Asia
The Japanese stock market, for example, held back for the time being on Monday. The Nikkei 225 closed with a minus of 0.6 percent at 23,686 points. In China, however, prices climbed: The CSI-300 gained 0.4 percent to 3,916 digits. Investors in the People’s Republic reacted with applause to an announcement by the domestic central bank: it intends to support the economy with an aid package worth billions.
New York consolidated
Investors in New York had taken profits on Friday. The Dow Jones Industrial, which had climbed to a historic all-time high the day before, lost 0.9 percent to 29,103 jobs on Friday. For the entire week, the yield was around 3 percent. The S&P 500 dropped 0.5 percent to 3,328 on Friday. And the Nasdaq 100 also lost 0.5 percent to 9,401 – after all, it still marked a record high during the course of the day.
Even the robust job market did not create a buying mood. According to the Department of Labor, the USA created 225,000 new jobs in January – 165,000 new jobs had been expected. And the reported business figures were a good 70 percent above expectations.
America, you have it better
Since news was in short supply on this slack day, here is another reading tip. If you want to find out how political issues really influence Wall Street, you should – besides our news – read a new US book. But not in the German Journaille. In the “Heute Show” on Friday, for example, it was said that Joe Biden was now only defeated in the primaries because he was thrown dirt on him without any justification.
The current number one on the “New York Times” bestseller list paints a completely different picture: “Profiles in Corruption: Abuse of Power by America’s Progressive Elite”. Author Peter Schweizer sheds light here on the dirty business of Democratic grandees Joe Biden, Bernie Sanders, Elizabeth Warren, Amy Klobuchar and Kamala Harris. So the US voter gets a balanced picture. If only a fraction of what the book says is true, the Democrats will be destroyed in the November presidential election. Which should give Donald Trump a Republican-dominated Congress. And a nice bull market for the Wall Street bulls.
That’s what the day will bring
The diary does not show any really important events on Monday, you can find the overview as always here: Market Mover
The Bernstein-Bank wishes successful trades!
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