25.03.2019 – Daily report. A recovery in the ifo index supported the DAX on Monday morning. The DAX initially slipped to just over 11,300 points, but then climbed slightly. Will that be enough to finally dispel the global fear of recession? There is also the threat of turbulence from the UK: There, the unfortunate Prime Minister Theresa May could be overthrown by her own cabinet. So be sure to keep an eye on your regular market updates.
Ifo Supports the DAX
Finally, a small ray of hope for German equities: the mood in the German economy brightened surprisingly in March. The ifo business climate index rose from 98.5 points in the previous month to 99.6 points. The forecast had been 98.7. The DAX rose slightly after the publication. However, it did not make any real headway. No wonder, because in the past few days a small depression has spread on the world’s stock markets. Gold was in demand. In addition, investors fled into ten-year German government bonds. Their yield was still below zero at minus 0.009 percent. Investors are thus paying the federal government money so that they can borrow something from the state.
German Fear in Asia
Fear had already kept the Asian stock markets under control on Monday: In Tokyo, the Nikkei index fell by a whopping 3 percent, closing at 20,977 points. The strength of the yen caused a sensation – the Japanese currency is a sought-after safe haven in times of crisis. In China, the CSI 300 fell by 2.1 percent to 28,496 points with the 300 most important stocks on the Chinese mainland. The starting point for the most recent slide was the German purchasing managers’ index on Friday, which was far worse than expected. By the way: “fear” is one of the few words from the Germans that have been translated into English.
Recession Signal Sinks Wall Street
This was joined on Friday by an American panic factor. For the first time since 2007, the interest rate on ten-year US government bonds fell below that on three-month money market paper. This is an early indicator of a recession. This is because investors prefer to park their money for zero or mini interest with the state in the long term rather than invest it in the short term. Risk appetite looks different. Wall Street closed in the red: the Dow Jones Industrial lost 1.8 percent at 25,502 points. The S&P 500 lost 1.9 percent to 2801 positions on Friday and the Nasdaq 100 fell 2.2 percent to 7326 points. Since the Fed announced on Wednesday that it would not be raising interest rates again this year, fear of recession has been making the rounds on the trading floor.
High Noon in London and Ankara
And what else is going on on the financial market? The music plays mainly with the foreign exchange. In Turkey, the lira is still staggering down. Surely you already noticed the preference of Turks for gold. The yellow metal is on the one hand a popular bridal jewelry, on the other hand a good insurance against the depreciation of the domestic paper currency. Turkey had condemned US President Donald Trump’s call for the Golan Heights to be awarded to Israel and warned of a new crisis in the Middle East.
Trump himself has one less worry, which Wall Street could be pleased about: The US special investigator Robert Mueller has found no evidence in his investigations of a conspiracy between the US president and Russia in the 2016 election campaign.
On the Thames, a cheerful political Western is about to begin its Brexit investigation. According to a report in the Sunday Times, eleven ministers want to overthrow the hapless Prime Minister Theresa May this Monday. Turbulence is therefore inevitable in the British pound – so please keep an eye on the news. Otherwise, it is questionable whether there can still be a contractual solution before the official EU withdrawal date of April the 12th is postponed. We wish you a successful day with your trades!
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