27.03.2020 – Daily Report. Yesterday, the DAX made it just above the magic mark. Recently it has been lurking a good deal below it again. The question remains whether investors will take on new risks before the weekend.
Losses in Frankfurt
On Friday afternoon, the German stock market first took a breather: the DAX was 2.1 percent weaker at 9,791 points. Yesterday, the leading index had regained the 10,000 and ended Xetra trading at 10,000.96 points. The gold price dropped 0.7 percent to 1,618 dollars.
The US futures fell by about 2 percent. The US House of Representatives tried to collect its members of parliament to finally pass the gigantic aid package of around 2 trillion dollars. In view of the incoming reports, some brokers became queasy.
Corona costs us 1.5 trillion euros
According to David Folkerts-Landau, Chief Economist at Deutsche Bank, the Corona pandemic is likely to cost the Federal Republic of Germany up to 1.5 trillion euros. The expert also told the “Focus” that this year, the German GDP will decrease by about 7 to 8 percent. At least he encouraged investors: “But from the fourth quarter onwards things will start to pick up again, and we expect a noticeable increase in economic growth in 2021”.
Meanwhile, the EU has been unable to agree on which financial instruments to use to help countries such as Italy or Spain that are particularly hard hit.
USA reports the most infections
Furthermore, the USA has reported more known corona infections than any other country. By Friday morning there were almost 86,000 known cases, about 81,800 in China and about 80,600 in Italy, according to the Johns Hopkins University in Baltimore. There are now more than half a million confirmed infections with the Sars-CoV-2 virus worldwide.
Meanwhile, the G-20 spread optimism. After a teleconference, the group of states announced that a total of more than 5 trillion dollars would be pumped into the global economy.
Profits in Asia
TThe CSI-300 in China rose 0.3 percent in the morning to 3,710 digits. In Tokyo, the Nikkei gained 3.9 percent to 19,389 jobs.
New York recaptures ground
Brokers in the USA again took bold action yesterday. The indices closed at their daily high. The Dow Jones Industrials gained 6.4 percent to 22,552 points. Since Monday’s low on the lowest level since November 2016, the index has gained 4,000 points again. In the past three days the plus was 21.3 percent, the best run since 1931, and the S&P 500 gained 6.2 percent yesterday to 2,630 points. And the Nasdaq Composite gained 5.6 percent to 7,797 jobs.
Whales on the hunt
Incidentally, speculation on Wall Street that large “whales” are on the move and stocking up on stocks has been going on for days. which are huge pension funds and sovereign wealth funds. This in order to replenish the share of total assets in equities, which fell in the course of the sell-off, by the end of the month, according to JPMorgan.
It is fitting to point out that the Norwegian sovereign wealth fund has lost a whopping 124 billion dollars in the sell-off from its previous total of 1.1 trillion dollars. The petrodollar-fuelled Government Pension Fund Global is considered the largest investment vehicle of its kind in the world. Outgoing CEO Yngve Slyngstad announced that the fund will increase its equity weighting in the portfolio from 65.3 to 70 percent.
Horrendous rise in unemployment in the USA
Interestingly enough, the VIX does not really reset. The panic indicator remains at 61 points despite all the aid programmes in the USA and Europe.
No wonder, yesterday’s figures from the American job market were gloomy: Last week, the number of first-time applications for US unemployment assistance increased tenfold to just under 3.3 million. The previous high was 695,000 weekly applications in 1982, and in view of this development, Fed Chairman Jerome Powell took the floor. On US television he said that the USA was probably already in a recession. At the same time, he did not rule out further emergency measures in the fight against the consequences of the virus crisis.
Stock market legend warns of new corona crash
Meanwhile, an investment legend warned of a violent return of the crisis on the stock market. Paul Tudor Jones, who had his greatest times in 1987, told CNBC that his flagship fund had achieved a return of 1.5 percent in the past two months. After all, he has thus avoided the big sell-off. Jones said he expects a peak in the outbreak in early April – and then the market will test the lows again. The man knows what he is talking about: According to Boerse.de, the nearly 4 billion dollar fund Tudor BVI Global has gained an average of 26 percent per year since its inception. PTJ’s private assets are estimated at just under 4 billion dollars – making the self-made billionaire one of the 400 richest people in the world.
What the day brings
At the end of the week, the diary only lists a few interesting events. As always, you can find an overview here: Market Mover
For example, consumer spending in the USA is scheduled for February at 1:30 pm.
At 3:00pm the consumer confidence of the University of Michigan begins.
The Bernstein-Bank wishes successful trades – don’t let the quarantine get you down!
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