29.04.2019 – Daily report. Quietly the lake rests at the stock exchange. Brokers in Frankfurt were visibly restrained at the beginning of the week, with little activity on the trading platform. No wonder: Most investors are currently waiting for the Federal Reserve’s midweek speech. And on the progress of the customs negotiations between China and the USA.
DAX slips slightly
At the start of the week, Germany’s leading index fell by 0.4 percent to 12,269 points. On Wednesday last week, the DAX climbed to 12,350 points, its highest level since the beginning of October 2018. In the reporting season, Covestro spoke with balance sheets. As expected by most analysts, the plastics group faced tougher competition and price declines in the first quarter. Bayer and Continental traded ex-dividend at the beginning of the week.
Investors wait for the Fed
There should be little movement in global trading ahead of the Federal Reserve’s upcoming speech. Especially as the middle of the week is a public holiday on Labor Day. The Fed will close its two-day monetary policy session on Wednesday. Analysts do not expect the Federal Reserve to change its key rate between 2.25 and 2.5 percent.
Do or die in the customs dispute
There was a small amount of news in the customs dispute between China and the USA. According to US Treasury Secretary Steven Mnuchin, the negotiations have entered the decisive final round. Both sides want an agreement, there is good progress, he told the New York Times. However, the US politician immediately dampened the euphoria: The talks had now reached a stage where there was either an agreement – or no deal. The next round of talks is to start tomorrow in Beijing.
Good mood in China
In China, positive data from the industrial sector created a buying mood: After four consecutive declines, corporate profits had risen again in March. According to the state statistics office, the increase was 13.9 percent compared to the same month last year. This is the strongest increase since July 2018. In January and February of this year there had been a minus of 14 percent. The CSI 300 rose by 0.3 percent to 3,900 points. There was no trading in Japan because of the current Golden Week.
Robust US economy
Strong economic data from the USA also arrived on Friday. According to the data, the American economy grew faster than expected in the first quarter. Inflation has also risen only moderately. All data can be found here: Market Mover
On Wall Street, Nasdaq Composite and S&P 500 were in record regions. The Dow Jones Industrial closed Friday up 0.3 percent to 26,543 points. However, for the week as a whole, the index was on the spot. The market-wide S&P 500 advanced by 0.5 percent to 2940 points. Intel caused disappointment with a profit warning. The Nasdaq 100 rose by only 0.1 percent to 7,827 points.
Trump admonishes OPEC
Interesting things also happened on the energy market. US President Donald Trump on Friday called on the OPEC cartel to increase oil production due to rising oil prices. He had spoken with Saudi Arabia and other producers, Trump had tweeted that everyone was in agreement.
Goldman sees lira low
Goldman Sachs has also taken the floor in line with our latest special report on Turkey. The investment bank referred to the interest rate decision of the Turkish central bank last week, whose commentary lacked any previously shown determination to defend the domestic currency. Goldman Sachs now sees an all-time low of 7 lira against the dollar over the next twelve months. USDTYR was last quoted at 5.94. At the local elections at the end of March, the lira had still stood at 5.48. The USDTYR had been at 5.48 for the last time. The melting of the lira should boost demand for gold in Turkey. Here, too, Goldman Sachs issued a statement. The investment bank stressed that central banks are currently buying a lot of gold. This is a factor for a return of over 1,300 dollars per ounce.
This is what the day brings
On Monday’s agenda at 02:30 p.m. German time is mainly personal expenses and income in the USA in March.
For traders who are interested in government bonds, it could be exciting at 03:45 p.m. when the European Central Bank announces the weekly change in the Eurosystem central banks’ holdings of government bonds, covered bonds, corporate bonds and asset-backed securities.
Bernstein Bank wishes you a very successful day with your trades!
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