14.11.2019 – Daily Report. What is holding back investors in Frankfurt? While Wall Street is constantly reporting new records, the DAX is hesitating. And this despite the fact that positive news has come in from the German economy. But news in the customs dispute between China and the USA is slowing the buying mood.
Frankfurt hesitates again
Once again, German investors were hesitant in early trading. The DAX lost 0.3 percent to 13,195 points by midday. Following relatively strong German economic data, many brokers now believed less in a more relaxed interest rate policy on the part of the ECB. EURUSD fluctuated slightly around 1.10.
German recession avoided
Contrary to almost all expectations, the German economy has again grown slightly. In the third quarter of 2019, the gross domestic product (GDP) increased by 0.1 percent compared to the previous quarter, as reported by the Federal Statistical Office. According to revised figures, there was a decline of 0.2 percent in the second quarter. At the start of the year, Germany had recorded growth of 0.5 per cent according to a new calculation. The new figures avoided a “technical recession”, as economists see it when economic output shrinks two quarters in a row. All data can be found here: Market Mover
New Customs Controversy Stopper
And, of course, this slowed down the fact that the customs dispute between China and the USA is not looking as rosy as hoped. First, the Wall Street Journal reported that talks were now hanging over Chinese purchases from US farmers. And China insisted on a withdrawal of punitive tariffs as part of a Phase 1 deal. As CNBC reported, Gao Feng, spokesman for the Chinese Department of Commerce, was indirectly calling for this. He explained that if both sides reach an agreement on the first partial agreement, the customs rollback must fully reflect the importance of the partial agreement. USDCNY was at 7.0195.
China’s economic engine stutters
Beijing also desperately needs a deal. Industrial production in China grew much more slowly than expected in October. Production rose by 4.7 percent in October compared with the previous year, according to the national statistics office. Most analysts had expected an increase of 5.4 percent. Growth from January to October is the lowest since Reuters records began in 1996. Retail sales were at their lowest level since 2003 and investments were weakest since 1998. Hoping for government intervention, the CSI-300 in China rose by 0.2 percent to 3,906 points. The Nikkei index meanwhile fell by 0.8 percent to 23,141 points.
Dow Jones with new record
Unimpressed by the start of public impeachment theatre in Washington, the Dow Jones set a new final record. For the first time in its history, it passed the 27,800-point mark – partly due to a price jump at Walt Disney. At the closing bell, the leading index gained 0.3 percent to 27,783 points. The S&P 500 rose by 0.1 percent to 3,094 points. In contrast, the Nasdaq Composite lost 0.1 percent to 8,482 points.
Fed in a sideways movement
The brokers followed the statements of Fed chief Jerome Powell before the congress with excitement. As expected, he confirmed the prospect of a pause in interest rates in the USA.
This is what the day brings
On Thursday there will be some market moving topics.
First, US producer prices will be announced at 2:30pm for October.
At the same time, the first weekly applications for unemployment benefits will also be reported.
Otherwise, it’s Fed day again – all day long, bosses of regional central banks step up to the microphone – so be sure to keep an eye on your trading platform. The most important date for trades in dollars and US treasuries is Fed chief Powell’s speech to the House Budget Committee at 4pm.
The Bernstein Bank wishes you successful trades!
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