05.12.2019 – Daily Report. Uncertainty everywhere: Conflicting signals are arriving in the customs dispute between China and the USA. Wall Street and Asia are picking up, Frankfurt hesitates. Investors are also puzzled about oil. Only the British pound has a clear direction – it is climbing steeply against the euro.
Frankfurt running sideways
In view of the unclear situation, investors on the Frankfurt stock market initially kept a low profile. The DAX remained unchanged at 13,136 points on Thursday morning. The stock market was dampened by data from German industry: in October, industrial companies had to accept a decline in incoming orders. In a monthly comparison, the number of new orders fell by 0.4 percent, as reported by the Federal Statistical Office. Compared to the previous year, orders fell by 5.5 percent.
Searching in the customs dispute fog
Meanwhile, investors were analysing the situation in the customs dispute. It is still unclear whether there will be a Phase 1 deal between China and the US or not. In Beijing, Gao Feng, CNBC’s Ministry of Commerce spokesman, said China believed it needed to cut relevant tariffs if both sides wanted to reach a Phase 1 agreement. Wait a minute: Attentive observers will have noticed that China had so far communicated about the gang that all US punitive tariffs would have to be “abolished” before a deal could be made. Now we are talking about “lowering”. Is that a concession?
At the same time, US Secretary of Agriculture Sonny Perdue dampened hopes on CNBC that reliable deals could be concluded with China. For example, China is not buying soybeans in the USA. US exports to China this year are depressing. Rather, China is stocking up in Argentina and Brazil. Didn’t Beijing promise to order around 50 billion dollars in products from US farmers according to the pierced news?
Asian stock markets are attracting attention
Despite this, investors in Japan took action. The Nikkei rose 0.7 percent to 23,300 points. Investors celebrated the expected adoption of an economic stimulus package worth 26 trillion yen or around 220 billion euros. In Hong Kong, the Hang Seng gained 0.6 percent to 26,217 jobs.
The Chinese CSI-300 gained 0.8 percent to 3,879 points.
In view of all this optimism, we take the liberty of issuing a small warning: if you trade CFDs or online stocks, you might want to consider a short position on China stocks. Yesterday, for the first time since 2012, an IPO flopped in China. Luoyang Jianlong Micro-Nano New Materials slipped 2 percent on its debut in Shanghai.
New York is recovering
Thanks to new hopes of a deal in the customs dispute, the US stock exchanges moved north. The Dow Jones Industrial gained 0.5 percent to 27,649 positions at the closing bell. The S&P 500 rose by 0.6 percent to 3,112 points. And the Nasdaq Composite Index climbed 0.5 percent to 8,567 points. Job data from API brought a slight damper, according to which only 67,000 new jobs were created in November.
Warning on the oil market
Meanwhile, a report in the Wall Street Journal caused a sensation among energy traders. According to the report, Saudi Arabia is no longer prepared to compensate for overproduction in other countries. Specifically, Riyadh is angry with Iraq, Nigeria and Russia. OPEC and its allies have actually committed themselves to a collective reduction in emissions of 1.2 million barrels a day. We are curious to see what news will come in from the OPEC+ meeting in Vienna. You should therefore keep an eye on the regular market updates.
The pound is bursting with strength
Meanwhile, the British pound was stronger against the euro than it had been for two and a half years at 1.1839. The reason: according to a new survey by YouGov, the Conservatives came in at 42 percent and Labour at 33 percent. Other surveys also point in the same direction: DeltaPoll sees a lead of 13 percentage points, Opinium even 15, BMG only 6 and IMC 7. No one, however, sees Labour, which recently appeared radically to the left, ahead. Told you so: In our Special Report, we had already predicted that the market would want the Tories and thus clarity in Brexit, which speaks for a strong sterling.
This is what the day brings
Thursday brings some interesting dates: Market Mover
In the USA, for example, the trade balance for October will be drawn up at 2:30pm.
Ditto the weekly first applications for unemployment assistance.
At 4:00pm the new orders industry follows fort he month of October.
At the same time also the order intake for durable goods.
The Bernstein Bank wishes you successful trades!
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