Consumer Mood Damps the DAX

By 26/03/2019News


26.03.2019 – Daily report. So much for the hoped recovery: The German stock market continues to crumble. Spoiler alert, following slight pre-IPO gains, the GfK consumer climate index ruined the party. It was worse than expected. The targets from overseas were also mixed. Investors are now eagerly awaiting the coming economic data from the USA.

GfK Index Disappointed

In early Tuesday trading, the DAX plunged to 11,300 points, but then recovered slightly. But the counter-movement was not really convincing for the bulls. The poor mood of German consumers, captured in the consumer climate index of the Gesellschaft für Konsumforschung (GfK), caused a meagre mood in Frankfurt. In March, the indicator reached 10.4 points, one of the lowest values in the past two years, as GfK announced on Tuesday morning. And a drop of 0.3 points since February. The forecasts were particularly disappointing, with a slight increase to 10.8 points.

Mixed Targets from Asia

It was also necessary to wait and see because of the overseas requirements. Investors in Asia had not set a clear trend in the morning. Although the Nikkei rose by 2.2 percent in Tokyo to the closing level of 21,428 points, the Nikkei was unable to hold its own. Above all, companies with strong exports were in demand, as the yen fell again. By contrast, the CSI 300 in China lost 1.2 percent to 3,697 points. Here, investors are waiting for news on the US-China tariff agreement, just as we are.

New York Wavering

The German shares had received no support from the New York stock exchange. Wall Street stabilized after the recent losses, but nothing more. The Dow Jones gained a minimal 0.1 percent to 25,516 points. The S&P 500, on the other hand, lost 0.1 percent to 2,798 positions. The Nasdaq Composite also lost 0.1 percent to 7,637 points.

Recession Signal from US Bonds

A strong headwind for equities blew over from the US bond market: At 2.375 percent, the yield on ten-year US government bonds fell to its lowest level since 2017. This has further intensified the reversal of the yield curve – three-month bonds yield more than long-dated bonds. The inverse yield curve is seen as a signal of recession, which the Federal Reserve is also observing.

An Ugly Divorce

Meanwhile, the Brexit turbulence continues and the volatility in the British pound should be the only thing certain in the coming days. Which in turn speaks for professional trading with the best German CFD brokers. The parliament de facto deprived Prime Minister Theresa May of her power. Although only for one day, the loss of authority cannot be overlooked. Against the will of Downing Street 10, the House of Commons now wants to discuss alternatives to the Brexit agreement on Wednesday. May immediately stressed that the government did not feel bound by the upcoming vote. The divorce from the EU is thus developing into a political war of roses, with an uncertain outcome.

This is What the Day Brings

Now we are eagerly awaiting the coming economic data. At 1.30 p.m., the US building permits for February will be issued via the ticker. The forecast here is 1.32 million. After that the consumer confidence of the Conference Board for March arrives at 15.00 hrs. Forecast: 132.0. We are watching Wall Street’s reaction with interest and wish you a very successful day with your CFD trading!

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