24.02.2020 – Daily Report. The bears lead the bulls to the scaffold: the prices know no stopping. After the sharp sell-off on Wall Street, the DAX breaks the 200-day barrier.
Frankfurt Stock Exchange crashes further
Where is the crash going to stop? On Ash Wednesday, the DAX initially slipped to 12,370 points. This means that it has easily broken through the 200-day line at 12,638 points. The last time the DAX had been below this moving average was at the end of August 2019. At least the line seemed to attract new buyers again – the indicator ventured a slight rebound. Around noon, the DAX was still 1.7 percent weaker at 12,569 points.
The prices of US futures were pulled down: The Dow contract was down 0.6 percent and the future on the S&P 500 was down 0.4 percent. After Monday’s crash, we had warned you in a special report with reference to Morgan Stanley against another sell-off – now we are in the middle of it.
Covid-19 and no end
Meanwhile, economists expect the possibility of a recession in Italy as a result of the security measures to contain corona. The economic metropolis of Milan is largely paralysed. It remains to be noted: the epidemic could spread throughout Europe. Except for those states that have no problem with it, such as Hungary. We also suspect that sooner or later Russia will be affected because of its close trade links with China.
The World Health Organisation suspected that the world was not prepared for the virus. The US public health authority CDC warned of a spread of coronavirus also in the USA. And this despite the “aggressive containment strategy” of the United States, because it is becoming increasingly difficult to slow down the introduction of the virus because of its spread in other countries./p>
Losses in Asia
Meanwhile South Korea has declared the highest alert level for infectious diseases. As a result, the CSI-300 in the People’s Republic of China slipped by 1.2 percent to 4,073 points. And the Nikkei index lost 0.8 percent to 22,426 points.
Helicopter Money in Hongkong
Meanwhile, Hong Kong is trying to cushion the Corona losses with financial aid. Each permanent resident of the former crown colony is to receive 10,000 HK dollars, or 1,100 euros, in cash. Finance Minister Paul Chan assumes that the economy in Hong Kong will grow between minus 1.5 percent and plus 0.5 percent in 2020.
Heavy bear market in New York
Investors in the USA fell into fear yesterday. The Dow Jones lost 3.2 percent or almost 900 points to 27,081 points. This is the lowest level it had last reached last October. The Dow only stopped just below the 200-day line. The S&P 500 lost 3 percent to 3,128 points. And the Nasdaq-100 slipped by 2.7 percent to 8,835 points. Meanwhile, the yield for ten-year US bonds slid to a record low of 1.3055 percent.
Strong rise in the fear indicator
Only one hope for the bulls: The fear indicator VIX is now overbought. In just a few days it had risen from just under 12 to over 30 points. Now the 14-day Relative Strength Index is trading at 79.28. Was that it?
In a panic, it can go much more into overbought territory. Typically, a real, total, all-consuming, devastating fear is accompanied by corresponding headlines in the mainstream media; and losses in the major indices of up to 10 percent. On the other hand: The Dow recorded its biggest two-day loss ever in absolute terms on Monday and Tuesday. Everything depends on whether a vaccine is found quickly.
What the day brings
The diary brings little distraction from the epidemic. You can find the overview as always here: Market Mover
In the USA, for example, the figures for owner-occupied homes that have been sold are reported in January. This at 16.00.
And at 16:30, the weekly oil report is due.
The Bernstein-Bank wishes strong nerves and successful trades!
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