23.12.2019 – Daily Report. Shortly before the festive days, Wall Street gave the bulls new records. The DAX in Frankfurt continues to lag behind. No wonder, most stock exchange traders have already left for their Christmas holidays. After all, the MDAX is climbing to an all-time high.
MDAX at the peak – lethargy in the DAX
Christmas lethargy in the German benchmark index – the free real-time prices on the trading platform hardly moved at all. Most players have closed their books for this year. On Monday morning, the DAX was down 0.1 percent to 13,303 points, still well below its all-time high of 13,596. The music was playing with the midcaps: the MDAX climbed to a new record of 28,558 points and recently gained 0.5 percent to 28,552 points. The futures on Dow Jones and S&P 500 signalled a continuation of the high-altitude rush with a small plus of 0.2 percent.
New hope because of phase 1
Investors in global trading registered with interest new signals of relaxation from China: Beijing announced on Monday the reduction of import duties on 850 products worth 389 billion dollars. As of January 1, this will make frozen pork, high-tech components and medicines cheaper, for example. In addition, private investors will have better access to the markets for oil, telecommunications and energy production. All this supported the hope that the Middle Kingdom would open up its economy further – and that the customs agreement with the USA would be filled with life.
And this matched the optimism spread by US President Donald Trump: he had a very good discussion with President Xi Jinping about Phase 1. China had begun to purchase US agricultural goods on a large scale; in addition, preparations for the formal signing of the customs deal were underway. Trump continued to tweet that both sides would sign the agreement shortly. We are excited.
Neck blow in China
Nevertheless, prices in China plummeted. The Shanghai Composite slipped 1.4 percent to 2,963 points. And the Red Chips in the CSI-300 slipped 1.3 percent to 3,967 points. The reason for the slide was the announcement by a Chinese state-linked investment fund to reduce its holdings in a number of technology companies.
New records in New York
In the face of enormous cash inflows, Wall Street continued its record hunt on Friday. The Dow Jones Index rose by 0.3 percent to 28,455 points. On a weekly basis, it made a profit of about 1 percent. Since the beginning of the year, the leading index has so far marked a plus of 22 percent. The S&P 500 also set a new record on Friday, closing 0.5 percent higher at 3,221 points. To date, the balance has been a solid 28.6 percent. The Nasdaq Composite rose 0.4 percent to a record of 8,925 positions. Its annual balance sheet now stands at an enormous 34.5 percent. All major indices have torn small upward gaps.
According to Bank of America analysts, 16.6 billion dollars flowed into US stocks last week alone – the largest inflow in 13 weeks. We are experiencing the usual window dressing: fund managers are buying the winning stocks this year so that they can tell their clients that they had a very good nose and were part of the bull market.
Declaration of war on Ankara
One more look at USDTRY – the greenback held steady at 5.9353 lira. This means that the Turkish currency continued to weaken. Demands from the US Senate for sanctions against Turkey unsettled investors. In addition, the US has formulated additional rules in the new law for the military budget, which among other things prohibit the sale of F-35 fighter jets to the NATO partner. Trump had signed the paper in the night to Saturday.
This is what the day brings
The calendar is of course rather clear, all events can be found here:
Market Mover
The Chicago Fed National Activity Index (CFNAI) for November is due at 2:30pm.
At 3:45pm the European Central Bank reports changes in the Eurosystem central banks’ holdings of government bonds, covered bonds, corporate bonds and ABS.
And at 4:00pm the US new construction sales in November follow.
The Bernstein-Bank wishes successful trades – and now also to the last remaining traders a Merry Christmas and a relaxing holiday!
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