19.08.2019 – Daily report. Well, there you go: the DAX is rising, driven by positive comments in the customs dispute between China and the USA. Asia is also optimistic again. Just like Wall Street before it. Since no important economic data is available, politics will continue to determine what happens on the stock market.
Profits for the DAX
Germany’s leading index is finally rising again. Stimulated by the rising share prices in global trading, shareholders in Frankfurt took up the offer at the beginning of the week. The DAX climbed in early trading by 0.6 percent to 11,634 points. Demand was particularly strong for bank shares, which had suffered in the preceding days from the decline in yields on the bond markets.
Trump spreads hope
The main price driver was the American-Chinese customs dispute. US President Donald Trump is taking his time in the trade dispute. In his opinion, China is currently ready to reach an agreement, Trump said. He, on the other hand, was not yet ready to do so. In view of its difficult economic situation, the People’s Republic is much more dependent on a deal than the USA. In addition, the US administration wants to watch how Beijing deals with the protests in Hong Kong. This should be done in a humanitarian manner. “I think that would be good for the trade deal,” Trump said. In the former British colony, more than a million supporters of the democracy movement took to the streets at the weekend.
Decision on Huawei
And although Trump is skeptical about Huawei, Washington seems to be conciliating. Trump told reporters that he did not want to do business with the telephone company because he was a threat to national security. Nevertheless, the Wall Street Journal and Reuters reported that the US Commerce Department is preparing to extend the Huawei license by 90 days to continue service with existing customers. A decision on the matter is expected today, Monday, which will send an important signal in the customs dispute. So be sure to keep an eye on your trading platform, negative signals in the customs dispute are likely to swirl prices around.
Rising prices Asia
But first the Asian stock markets went up in the morning. The Tokyo Nikkei index rose by 0.7 percent to 20,563 points. In the morning, the CSI-300 had risen by a whopping 2.2 percent to 3,791 points. The Chinese blue chip index benefited from economic stimulus measures taken by the Chinese central bank, which wants to relieve borrowers with lower interest rates.
Recovery in New York
Investors in the U.S. also picked up again on Friday. The trigger for this was Trump’s intervention: he said that the dispute with Beijing would not last too long. There were talks between the two sides in which China offered good things. The Dow Jones then climbed by 1.2 percent to 25,886 points. The Dow thus brought the 200-day line into focus, as the US’s leading index had reset to the moving average on Friday. It thus reduced its weekly minus to 1.5 percent. The S&P 500 rose by 1.4 percent to 2,889 positions at the weekend and the Nasdaq 100 rose by 1.6 percent to 7,604 points.
This is what the day brings
At the beginning of the week there is a calm before the storm – really important data is not available. Since politics sets the pace, you should keep an eye on developments in the customs dispute, Argentina, Italy and Hong Kong – keep your market access open and your real-time prices in view.
Otherwise, investors are likely to hold back until Wednesday. Then the Federal Reserve will publish its minutes of the recent interest rate meeting. It was the first time in more than a decade that interest rates had been lowered by the guardians of the currency.
The US central bank conference in Jackson Hole will also begin at the end of the week. Fed head Jerome Powell will give a speech there. We are curious.
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.