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!
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