20.03.2020 – Daily Report. Green prices on the trading platform at last: The DAX rises sharply on Friday afternoon. This means that it is building on the stabilization of the previous day. US futures are rising because of the prospect of decisive action in the USA – it is likely to rain helicopter money here shortly. In addition, Germany will apparently put up a new protective shield for companies.
DAX presents itself strong
The German leading index rose by 5.3 percent to 9,066 points. We are curious to see how the Witches’ Sabbath will affect share prices today. The day before, the indicator had presented price movements as in normal times for a change. The DAX closed with a plus of 2 percent at 8,610 points. However, it was not the bazooka of the European Central Bank that triggered this recovery – but the turn to the north on Wall Street. US futures recently rose by over 5 percent.
Funds over 500 billion euros for German companies
One of the reasons for the good mood: As “Der Spiegel” reported, the federal government wants to set up a new rescue umbrella for companies that have got into trouble because of Corona. The fund is to contain a volume of around 500 billion euros. This is intended to save companies from insolvency by issuing guarantees for liabilities or actually injecting capital. This would probably amount to a partial nationalization. The model for this is the Special Fund for Financial Market Stabilization (Soffin), with which the state saved banks from bankruptcy during the financial crisis twelve years ago – it was endowed with 480 billion euros at the time, most of which was in the form of guarantees. Should banks be shaken in the current crisis, the Federal Government also wants to revive the Soffin.
Soon it will rain money
The USA is going even further with a real novelty: people there are likely to receive a cheque from the government shortly. Treasury Secretary Steven Mnuchin gave the Fox Business Network details of the helicopter money: a total of 500 billion dollars is to be transferred directly to the Americans in two tranches. In the first tranche it is to be 1,000 dollars per adult and 500 dollars per child. A whopping 3,000 dollars for a family of four. And yesterday, Republican Majority Leader Mitch McConnell submitted a similar stimulus proposal, which will now be negotiated with the Democrats.
So a brilliant Marshall Plan bypassing the banks, which often use government support to stabilize themselves. Similarly, US President Donald Trump emphasized at his press conference yesterday: companies in which the state steps in to bail out and takes over shares should not be allowed to buy back shares with tax money or even increase bonuses for management. Now that’s an announcement.
Slight gain on the Chinese stock market
In China, investors remained skeptical on Friday. Beijing reported again that there were no new domestic infections. However, the regime critical “Epoch Times”, which is well connected in the People’s Republic, reported that the reality in the country was different. The newspaper’s sources reported long queues in front of hospitals, the construction of emergency hospitals and tightly controlled quarantine. On the stock market, in addition to Corona, the fact that the People’s Bank of China (PBoC) has refrained from cutting interest rates also caused reticence. After all, the CSI-300 gained 1.8 percent to 3,653 jobs. In Tokyo, the stock exchange remained closed due to the holiday at the beginning of spring.
New York fights its way up
Yesterday, Wall Street had already sent out signals of stabilisation. The index closed about 1 percent higher at 20,087 points. The index had slipped by more than 3.5 percent in early trading, but in the meantime it had also climbed by almost 3 percent. The Nasdaq 100 gained 1.6 percent to 7,289 positions. And the S&P 500 finally gained 0.5 percent to 2,409 points. The sharp drop in the Philly Fed index and the decline in the US current account balance had been expected. As was the sharp rise in the number of first-time applications for unemployment benefits. We are therefore curious to see whether Wall Street will now initiate a strong recovery in view of all the steps it has taken as described above.
Record day for oil
The oil market experienced this recovery yesterday: crude oil made the largest daily gain ever. As a result, WTI increased by 26 percent in the meantime. Most recently, WTI rose by 9.3 percent to 28.31 dollars and Brent rose by 7.8 percent to 32.65 dollars. In order to stem the oil flood, Texas now apparently wants to cut production, as the Wall Street Journal reports, citing insiders. This would be the first time since the oil shock in the seventies. In addition, top managers in the industry had asked the Texas Railroad Commission, the regulator responsible for the industry, for state aid. This shows: the US oil industry is up against the wall. Assume that a large part of the small producers will topple over – which will reduce supply.
This is what the day brings
For the weekend, relaxation is the order of the day. As always, you will find the overview here: Market Mover
At best, the sales of used real estate in the USA in February at 15.00 hrs. might meet with some interest on Wall Street.
The Bernstein-Bank wishes successful trades – and lots of sunshine to enjoy in the domestic quarantine!
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