29.05.2019 – Daily report. All DAX shares in minus: Investors in Frankfurt pressed the sell button on Wednesday afternoon. No wonder, because the Wall Street targets were negative for the bulls. Once again the German stock exchange reacted unsettled to new signals in the threatening trade war between China and the USA. The ECB caused also scepticism.
DAX tests the 200 moving average
The bears swarm out: The DAX fell by more than one percent to 11,860 points. This can have consequences, as the leading index was cheerfully pranced on the 200-day line in recent days. It runs at around 11,908 points. A market close under it would be a signal for the bears.
The European Central Bank caused uncertainty: In their Financial Stability Review, the monetary authorities warned that tensions in world trade and weaker-than-expected economic growth could lead to new sales on the European financial markets.
Stopper in trade dispute
The day before, US President Donald Trump had disillusioned the trade dispute. During his state visit to Japan, he stressed that the USA was not yet ready for a deal with China. The US tariffs on Chinese goods could be increased very quickly and significantly. In addition, there will be no trade agreement between the US and Japan before the Japanese elections. In July, part of the parliament will be re-elected. The Nikkei 225 closed 1.2 percent lower at 21,003 points on Wednesday. The Chinese CSI 300 went 0.2 percent weaker at 3,664 points from trading.
Beijing weakens its own currency
The USA is holding back in view of the Chinese tricks – as already suspected at this point, Beijing is continuing to devalue the yuan. As the “Frankfurter Allgemeine Zeitung” reports, the US Treasury has for the fifth time in a row refrained from pillorying China as a currency manipulator. In the recently presented currency report, the ministry criticized the undervaluation of the Chinese renminbi, which depreciated by 8 percent against the dollar last year. However, China has not been castigated as a currency manipulator. According to the FAZ, this official classification would legally mean that the United States would have to start official negotiations with Beijing on exchange rate policy.
Losses on Wall Street
In the USA, investors fled to the safe haven of government bonds: The yield on ten-year Treasuries slipped to 2.232 percent, its lowest level since September 2017, while the Dow Jones lost 0.9 percent to 25,348 points. The S&P 500 fell by 0.8 percent to 2802 positions and the Nasdaq 100 lost 0.3 percent to 7,278 points on Tuesday. Here, too, a look at the chart technique: the Dow is now hard on the 200-day line, which has already been mentioned several times at this point. De facto, the closing price has already perforated the moving average. We are curious whether the support will hold. The other major US indices are still hovering above it.
These dates are on the agenda
Important economic dates are not on Wednesday’s agenda. CFD traders in the oil market should keep an eye on the American Petroleum Institute (API) crude oil inventory data at 10.30 pm.
Tomorrow, however, it will be exciting in the USA: At 2.30 p.m., the first applications for unemployment benefits will be made via the ticker, ditto the second publication for the gross domestic product of the USA in the first quarter.
At 16.00 o’clock the pending house sales in America follow. And at 5 p.m. the crude oil inventory data are reported to the state Energy Information Administration (EIA).
As always, you will find all dates here: https://bernstein-bank.com/research/#market-mover
We wish you successful trades!
Important Notes on This Publication:
The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.