08.05.2019 – Daily report. Modest courage on the Frankfurt Stock Exchange: Although the clock is ticking in the customs dispute between China and the USA, some buyers again appeared on the floor. The deadline is expected to expire on Friday at noon on the American East Coast. Will a final customs deal be made by then? Anything seems possible. Meanwhile, few investors in the DAX are using the recent sell-off to hunt for bargains.
Minimal plus for the DAX
Finally a few green prices again on the trading platform: The DAX has worked its way up moderately on Wednesday morning, but at noon investors lost courage again. German industrial production proved to be an anti-depressant in March: it rose by 0.5 percent compared to the previous month, and many analysts had expected a minus of the same magnitude. In addition, four DAX companies reported figures. While the interim reports at Wirecard and Siemens led to price gains, investors at Commerzbank and Munich Re remained rather muted.
New losses in Asia
Investors in Asia had previously taken out cover. The Nikkei lost 1.5 percent to 21,603 points, the Chinese CSI 300 fell by 1.4 percent to 3,667 points. Bad news came from the Chinese economy. Exports from slipped surprisingly sharply by 2.7 percent in April compared with the same month last year, according to the customs authorities in Beijing. While few pessimists had assumed an even stronger minus, the majority of analysts had expected a plus of 2.3 percent. Should the new US punitive tariffs take effect from Friday, this should probably cost further percentage points of export growth.
Minus in New York
Of course, the threat of the deal bursting had also caused fears on Wall Street. The Dow Jones Industrial lost 1.8 percent to 25,965 points at the closing bell on Tuesday. The collective index S&P 500 slipped by 1.7 percent to 2884 places and the high-tech index Nasdaq 100 fell by around 2 percent to 7640 points.
Meanwhile, the tension in the oil market is also rising. The Mullah regime in Tehran announced that it would withdraw parts of the international nuclear treaty. Effective immediately, the country will enrich uranium again. Iranian President Hassan Rouhani gave the European Union an ultimatum: the EU must decide within 60 days whether to follow America or resume oil trade with Iran. At the same time, US Secretary of State Mike Pompeo warned against an “imminent” attack by Iran. Yesterday he surprisingly travelled to Baghdad and demanded that the Iraqi government “adequately protect Americans in their country”. So is Iran threatening to attack American soldiers here? The reaction would be devastating for the Islamists in Tehran – and also for the worldwide oil trade in the bottleneck of the Strait of Hormuz. So will fresh Iranian oil reach the world market because the EU is collapsing? Or will the situation even escalate into war, which could catapult the oil price to new heights? Let us wait and see.
This Wednesday again there are rather few important dates on the calendar. At 1.30 p.m. it becomes interesting for foreign exchange and bond traders, as the European Central Bank publishes its report on monetary policy. ECB President Mario Draghi will explain the line of the currency guardians as usual.
At 16.30 German time the weekly oil report of the American Energy Information Agency will follow.
All important data can be found here: Market Mover
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