16.09.2019 – Daily report. The professionally executed air strike on an important Saudi oil plant stops the latest DAX bull market. Oil prices are now skyrocketing at double-digit rates, and gold and silver are picking up. Iran is presumably behind the attack. The question now is whether the USA and Saudi Arabia are retaliating.
Fear of war depresses the DAX
After eight days of gains, the German benchmark index fell back. By Monday midday, the DAX had fallen by 0.7 percent to 12,378 points. The reason for this was the attack on the important Saudi oil refinery Abqaiq – now a conflagration is threatening the Persian Gulf.
As we had already analysed for you weeks ago in a special report, there is now a threat of the USA destroying Iran – especially the Revolutionary Guards. So be sure to keep an eye on the regular market updates and trade only with Germany’s best brokers with Bafin licenses who have strong servers – if it starts, the oil price should continue to shoot up and the world’s stock exchanges should shake.
Oil price jump
On Monday morning, the price of Brent shot up by up to 20 percent in the first trading minutes before the situation calmed down again. In percentage terms, this was the biggest price jump since the Iraq war in January 1991. In absolute terms, the rise of just under 12 dollars in the Brent future in London was even the largest since the contract was issued in 1988, as Bloomberg added. WTI rose by around 11 percent. In the meantime, US President Donald Trump relaxed the situation by announcing on Twitter that he would tap into the strategic oil reserve if necessary.
Air raid on Saudi refinery
Over the weekend, the largest oil refinery in Saudi Arabia in Abqaiq came under fire. The air raid – probably with drones and cruise missiles – hit the world’s largest Saudi Aramco refinery in Abqaiq near Khuraii’s second largest Saudi oil field early Saturday morning. The Saudis had to cut their production by 5.7 million barrels or about half. While experts do not see any sustained supply bottlenecks, the blow proves the vulnerability of the oil plants – surprisingly, there is no air defence like the Israeli “Iron Dome”.
While the Houthi rebels from Yemen took responsibility, US Secretary of State Mike Pompeo blamed Iran for the attack. The rebels reported the use of ten drones, but there were 19 impacts. Photos of wreckage in the Saudi desert, which probably belong more to missiles than to drones, continued to circulate on the Internet. On Sunday evening, a US government spokesman reported that there were indications that missiles had flown in from a west-northwest direction, i.e. from Iran – and not from a southern direction from Yemen.
Locked and loaded
Meanwhile, US President Donald Trump has threatened Iran with retaliation after the attack on Saudi Arabia. The United States is “locked and loaded”, which means that the weapon is loaded and the cock is cocked. Tehran rejected the accusations.
The commander of the Iranian Aerospace Force of the Revolutionary Guards, Amir Ali Hajizadeh, indirectly threatened the USA with war and immediately identified his troops as the main target of the Americans. Hajizadeh told the official news agency Tasnim that all American bases and aircraft carriers are within a distance of 2,000 kilometres around Iran and thus within reach of Iranian missiles. He added: “His country has always been ready for a total war. We think: If an American aircraft carrier is sunk, then the Iranian army will be exterminated. Which in turn would draw the respective allies into a great war: Saudi Arabia, the United Arab Emirates, Oman, Israel on the one hand; Houthi rebels, Hamas, Hezbollah, Lebanon on the other.
Dampers from China
Other factors also depressed sentiment on the stock market. Recent data shows that China’s economy was weaker than expected due to the trade war with the US and structural problems in August. Growth in industrial production, retail sales and investment in property, plant and equipment continued to slow. As always, you can find all the data here: : Market Mover
In the People’s Republic of China, the CSI-300 with the country’s most important blue chips fell by 0.4 percent to 3,958 points. In Japan, the stock exchanges were closed due to a holiday.
Waiting in New York
On Friday, investors in New York had taken it easy. The Dow Jones gained 0.1 percent to 27,220 points, a weekly gain of 1.6 percent. The S&P 500 fell 0.1 percent to 3,007 points on Friday and the Nasdaq 100 lost 0.3 percent to 7893 points. Even solid economic data from the US retail trade did not create a buying mood.
This is what the day brings
Apart from the trouble spot in the Persian Gulf, there are hardly any important news to come. But these events offer more than enough material to shake the global financial markets – so keep your trading platform in view and your market access open at all times.
At best, the Empire State Index for September at 2.30 pm will be important.
The Bernstein Bank wishes you successful trades!
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