Investors wait and see

By 06/11/2019News
Stick chart

06.11.2019 – Daily Report. But now it’s really time for a breather: After the close final records of Dow Jones and Nasdaq Composite, the DAX is now stagnating. Nevertheless, it is enough for a new high for the year. The same applies to the Nikkei. Once again, there is a lack of market-moving news. The stock exchange is waiting for execution of the China-USA customs deal.

Modest courage in Frankfurt

The German leading index was moderately optimistic in early Wednesday’s trading. The DAX crawled to a new high for the year of 13,181 and recently remained unchanged at 13.150 points. However, the free real-time prices on the trading platform hardly flashed at all. In addition to the reporting season, brokers in Frankfurt focused their attention on German economic data. However, the figures on sentiment among German purchasing managers and European retail sales did not really move prices. All data can be found here: Here is the overview: Market Mover

When’s the customs deal coming?

The number one issue in global trade remained the trade dispute between China and the USA. It is still unclear when or where US President Donald Trump will sign the agreement with President Xi Jinping. The market also hopes to cancel the new US tariffs announced on 15 December. Trump said both sides were looking for a location to fix the partial agreement, and Reuters said the signing could take place this month.

Beijing strengthens the Yuan

Meanwhile, China sent out a sign of good will on the currency market. The People’s Bank of China set the daily midpoint fix at 7.0080 against the dollar. According to CNBC, this was the highest price since August 8. The onshore yuan may float in a band of 2 percent above the fixing. Washington is likely to watch the move benevolently: The USA had accused China of devaluing the yuan in order to make exports cheaper – and thus circumvent the punitive tariffs. Only yesterday did the yuan cross the red line again at 7.

Mixed tendency in Asia

The Asian stock markets reacted differently to the latest developments in the morning. The Nikkei 225 reached an annual high in early trading and closed 0.2 percent higher at 23,304 points. The weaker yen supported prices. Meanwhile, the Chinese CSI-300 with the most important red chips dropped 0.5 percent to 3,985 points in the morning.

New records set in New York

Investors in New York were also initially optimistic the night before. Both the Dow Jones Industrial and the Nasdaq 100 and Nasdaq Composite reached new highs on Tuesday.
The Dow rose to 27,560 points, and entered the closing bell with a new closing record of 0.1 percent at 27,493 points. The Nasdaq Composite squeezed out a minimal gain of 1.48 points and closed at around 8,435 points – the second final high in a row. The Nasdaq 100 had climbed to 8,229 points in the course of trading, but had to end trading 0.01 percent down at 8,210 points. The S&P 500 crumbled by 0.1 percent to 3,075 points. In addition to the optimism regarding the customs dispute, the data from the US service sector delighted the stock market.

Anticipation of US bonds

This also applies to treasuries: the yield of 10-year-olds rose by six basis points to 1.787 per cent, the largest increase in three weeks. The 2-year note gained 3.2 points to 1.594 percent. And the 30-year bond gained 6.2 basis points to 2.274 percent – again the highest daily gain in three weeks.

Repocalypse puzzle solved

Meanwhile an interesting news about Credit Crunch has arrived from the end of September. According to a Financial Times report, the culprit was JPMorgan. The bank went out of cash and invested massively in long-dated US bonds – a total of 130 billion dollars is said to have flowed out. The bond portfolio increased by 50 percent, while loans were reduced. The reason: loans granted are considered riskier than government bonds. And that’s why the G-SIB surcharge is rising, so JPMorgan has to hold back more cash reserves (G-SIB: Global Systemically Important Bank). But JPMorgan in particular has very little cash leeway because of dividends and share buybacks. We are curious to see whether this really was the sole reason for the freeze in the interbank market.

This is what the day brings

The view remains on a rather thinly filled daily calendar.
US productivity in the third quarter is due at 2:30pm.
At 4:30pm the weekly crude oil inventory data is reported to the state Energy Information Administration.
The Bernstein Bank wishes you successful trades!

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