06.02.2020 – Daily Report. The optimism on the stock markets remains intact on Thursday. On Wall Street, new records were set the night before. The DAX is only just below them. Investors have apparently checked off the corona dangers.
Good mood on the Frankfurt trading floor
The stock market took hold again in this country: the DAX was up 0.6 percent at midday, at 13,558 points. This means that the record high from the previous month at 13,640 points is not too far away, especially since the high in the morning was 13,606 points. On Wednesday the leading index had already gained 1.5 percent and closed at 13,476 points. US futures recently rose by 0.3 percent.
Hope in fighting the Corona virus
Many stock market participants firmly believe that the corona crisis will end. The World Health Organization (WHO) had denied the day before that there was a medicine against the virus, as reported by Chinese media. If this optimism doesn’t pay off. According to Jan Hatzius, chief economist of Goldman Sachs, the epidemic will cost 1 percent of China’s gross domestic product in the first quarter. And in the rest of the world, it will cost another 1 percent. The dent should be reflected quite quickly in the profits of listed companies.
Positive signal in phase 1
There was joy on the floor about the détente between China and the USA. Beijing is now reducing its special tariffs on US goods worth 75 billion dollars. The move comes at the same time as a reduction in US punitive tariffs on imports from China. So it seems that the initial agreement reached in mid-January is contributing to the trade dispute.
As a result, the Chinese CSI-300 rose by 1.9 percent to 3,900 points. And the Nikkei in Tokyo even gained 2.4 percent to 23,874 points.
New records in the USA
The evening before, American investors had already taken bold action. The Dow Jones rose by 1.7 percent to 29,291 points at the closing bell. It is therefore only a matter of time before the 30,000 mark falls. The S&P 500 and the Nasdaq Composite even marked new all-time highs. The S&P 500 advanced by 1.1 percent to 3,335 points. The Nasdaq Composite gained 0.4 percent to 9,509 positions. Brokers referred to the robust US labor market data from ADP. In addition, the stock exchange celebrated the end of the impeachment.
Acquittal in Impeachment
As expected, Donald Trump was acquitted by the Senate. Not because the Republicans are as unbelievably insane and backed a criminal as our Journaille insinuates. No, like Richard Nixon, his own party would have dropped Trump subito if there had been any real offense. But there weren’t. It is one of the duties of a president to investigate corruption. A presidential candidate like Joe Biden is not immune to it.
Our conclusion is that the Democrats have sunk themselves into the ground by attempting to remove him from office before the presidential election. Because the party that is now claiming such lofty values has never been interested in Biden’s enormously shady deals in Ukraine or China, or in the question of who in their own party was involved. We are curious whether there will be any investigations and revelations about this by chance before the election. The witnesses in the House who have been summoned for an inspection may also have finally convinced many voters that the Democrats are no longer the party of the working class. It is the lobby of the elites in the media, universities, Hollywood and the bureaucracy.
For the stock market this means that the chances for Trump in the presidential election have increased – and so might have the chances of the bull market continuing.
What the day brings
On Thursday the diary contains only a few important dates, you can find the overview as always here: Market Mover
The most important event will be the first applications for US unemployment assistance at 2:30pm.
The Bernstein-Bank wishes successful trades!
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