27.08.2019 – Daily report. It’s like a nightmare: New day, same subject. The ongoing dispute between China and the USA continues to keep the stock markets firmly under control. Sometimes up, sometimes down. This is joined by fears of recession. And the brokers are already largely stopping their work.
Frankfurt undecided
No impetus on the German stock exchange: The DAX recently suffered a rollercoaster ride of 0.2 percent to 11,680 points. No wonder, since the ongoing issue of the customs dispute is slowing down. At the end of the G7 summit the previous day, US President Donald Trump had expressed optimism in Biarritz, France: “I think we will make a deal with China”. But he will only agree to a trade agreement with China if it is a fair agreement that is good for the United States. But he believes that this can be achieved. And China’s vice president and chief negotiator Liu He sounded: China was prepared to resolve the dispute calmly through negotiations. So the matter remains exciting, hopes have so often been disappointed.
But the unresolved issues of Brexit and the government crisis in Italy are added to this. Both have an impact on the currency and bond markets. Germany also reported a rather weak economy: in the second quarter, gross domestic product fell by 0.1 percent.
Asia optimistic
Investors in Asia had shown more courage in the face of the customs dispute. The Chinese CSI-300 rose by 1.4 percent to 3,817 points. And in Tokyo, the Nikkei gained around 1 percent to 20,456 points. Shareholders in the Far East thus took the momentum from Wall Street with them.
New York full of hope
The American stock exchange interpreted Trump’s statements in a positive sense. The Dow Jones Industrial advanced by 1.1 percent to 25,899 points. The market-wide S&P 500 also climbed by 1.1 percent to 2,878 positions and the high-tech index Nasdaq 100 rose by 1.5 percent to 7,575 points.
Calls or not?
By the way, a bizarre footnote in the customs dispute was largely ignored as unimportant on the stock exchange. You should still keep it in mind, because it signals that hopes may be built on sand. On the fringes of the summit, Trump told reporters that Washington had received two very productive calls from China on Sunday asking it to resume talks. “They understand how life works,” Trump said. The president did not say whether he had spoken directly to China’s head of state Xi Jinping.
But Geng Shuang, a Chinese Foreign Ministry spokesman, commented that he knew nothing about calls to Washington. Hu Xijin, editor-in-chief of the Global Times, which is regarded as the mouthpiece of the Communist Party, also made the same comment. Either Trump lied to raise the stock market. Or the two officials mentioned simply knew nothing about the telephone calls that actually took place. Which suggests that the realists in Beijing around the negotiating team and the head of state bypassed the hardliners.
This is what the day brings
Have we already mentioned that the customs dispute can continue to swirl world trade around? About 1,000 times. So please always keep an eye on your trading platform!
Otherwise, on a day with only a few important announced news, it’s worth taking a look at US consumer confidence for August, which is due to arrive at 4 pm.
As always, you will find all dates here: Market Mover
The Bernstein Bank wishes 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.