26.03.2020 – Daily Report. “Sell the news” or doubts about the final passage of the monster rescue package in the US? The DAX fell back on Thursday for the time being. On the trading floor, worries were rife about America as the new epicenter of the plague.
Consumers and exporters with corona depression
The German leading index lost 2.1 percent to 9,664 points on Thursday noon. Consumer sentiment in Germany is suffering severely from the economic impact of Covid-19 and GfK market researchers forecast a fall of 5.6 points to 2.7 points in their consumer climate barometer for April. The last time the value was lower was in May 2009 in the wake of the financial crisis. Understandably, German exporters are also extremely skeptical. For example, the Ifo barometer for industrial export expectations slumped from minus 1.1 to minus 19.8 points. This is the sharpest decline since reunification and the lowest value since May 2009.
US Senate waves rescue package through
That night, after some back and forth, the US Senate had waved through the gigantic stimulus of $2 trillion at 96 to 0. If you need some reading material in quarantine, here is the full package on 800 pages:
The most interesting arrangement for us is the helicopter money: $1,200 for every low and middle-income American and $500 for children. Now the House of Representatives has to agree – the vote is expected to be held tomorrow Friday.
Fear of the USA as new epicenter
Nevertheless, US futures recently fell by around 1 percent. Fears are circulating on the trading floor that North America could become the next ‘hotspot’ for the coronavirus pandemic after Europe. The east and west coasts in particular have been hit hard, which is hardly surprising given the China Towns in New York and California and the attraction for tourists. After all, the death rate is still relatively low and only just ahead of Germany, as the Mises Institute noted.
From Northern Italy to Spain
The question remains as to the reason for the horrendous death figures in Italy and Spain. One answer: long unhindered, massive further spread by a large number of infected persons. We had pointed out the epicenter in the Italian fashion and leather industry with thousands of Chinese cheap laborers. And during Milan Fashion Week at the end of February and in the wake of football, the disease apparently made its way to Spain. One of the first cases in Spain was an Italian woman living in Barcelona who had previously visited her family in Bergamo and Milan, as reported by “Al Jazeera”. Link
And several FC Valencia players and a Spanish journalist reported a corona infection after the 4-1 defeat to Bergamo in Milan. A large demonstration by the Spanish Vox party and mass events for International Women’s Day in early March then carried the disease further in Spain. In addition, people in both countries long denied the dangers – kissing and hugging at the welcome were still practised, as the website Archyde.com noted. Link
Losses on the Asian stock exchanges
Which brings us to the successful drastic countermeasures in Asia with social distance, quickly closed borders and radical quarantine. In China the CSI-300 crumbled on Thursday by only 0.7 percent to 3,698 points. But in Japan the Nikkei lost a whopping 4.5 percent to 18,664 points.
Wall Street in the grip of politics
On Wall Street, classes staggered yesterday because of the political theater in the Senate. In the meantime, US Senator and still presidential candidate Bernie Sanders threatened via Twitter to stop the aid package if further regulations – for example in favour of workers – were not included. The Dow Jones Industrial closed with a plus of 2.4 percent at 21,200 points. In the meantime it had risen to over 22,000 points. After all, this was the first time since the beginning of February that the index recorded two consecutive days of gains. Yesterday, the broad-based S&P 500 gained 1.2 percent to 2,475 points. And the Nasdaq Composite even lost 0.5 percent to 7,384 points.
By the way, here’s a figure on the subject of saving everything and everyone: The blog ZeroHedge reported that the Federal Reserve bought assets worth 587 billion dollars between March 19 and 25 – which corresponds to 2.7 percent of the American gross national product. My goodness…
Professional trading pays off
If the recent horrendous swings on the stock markets have left you a little perplexed, here’s a little pack of optimism. If you’re smart, you can make a profit in these crazy times – it really works whether you trade online stocks or CFDs. We mentioned here recently that Pershing Capital Square has gone “all in”. Previously the fund had been short. In a letter to its clients, the hedge fund now reported the sale of puts it had bought before the crash for $27 million; the current proceeds: $2.6 billion.
That brings the day
The calendar of events on Thursday brings some interesting events, you can find the overview as always here: Market Mover
At 1:00pm the Bank of England will announce its interest rate decision, so traders in the British pound should be vigilant.
Date of the day are the weekly first applications for unemployment assistance in the USA, they run in at 1:30pm. A horror scenario is expected – the question is how strong the horror on Wall Street will be.
At the same time the US stocks are coming in.
Ditto the American gross domestic product for the fourth quarter – i.e. pre Corona and therefore not very interesting.
Otherwise, we are curious whether anything relevant for the stock market will come out of the summit of heads of state and government in Brussels.
The Bernstein Bank wishes successful trades
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