29.10.2019 – Daily Report. The bulls on the Frankfurt Stock Exchange are taking a breather. This is understandable after the constant annual highs. After the all-time high of the S&P 500 the night before, the Federal Reserve is now the focus of attention. Anything other than a rate cut would be a disappointment. The British pound also remains exciting.
Take a breather in Frankfurt
Investors in Frankfurt initially held back in early Tuesday trading. The DAX rose 0.2 percent in the morning to 12,917 points. This is understandable after almost a week of gains. Only yesterday the German benchmark index climbed to a new annual high of 12,986 points. The 13,000 continue to magically attract the indicator.
Trump bull because of China
The day before, Donald Trump had strongly raised stock prices in global trading – and announced the same. He had been wrong about the previous forecast of this kind a few days ago. Yesterday, the US President told journalists about the customs negotiations: “We are ahead of schedule”. The first part of the agreement with China could be signed at the summit in Chile in mid-November. The speculations on the floor are intensifying that Trump definitely wants an agreement so that the stock exchange does not crash – which would jeopardize his chances of being re-elected in 2020. Oh yes, there was something there: only very few people still think the Democrats’ impeachment project is realistic. Let’s wait and see what else comes out.
CSI-300 nevertheless resets
The stock market in China declined despite the progress that had been made. This is probably due to the fact that the USA continues to torture Beijing. In particular, the shares of telecom equipment supplier Huawei lost ground. The US regulatory authority wants to classify Huawei and its rival ZTE as risks to national security. In the People’s Republic of China, the CSI-300 fell 0.4 percent in the morning to 3,910 points. In Tokyo, on the other hand, the Nikkei index retired 0.5 percent stronger at 22,974 points. In the course of trading, the index had passed the 23,000 mark, thus climbing to its highest level for a good year.
New York bull market
The night before, Wall Street had presented a nice bull market. Brokers reported a veritable short squeeze. The Dow Jones gained 0.5 percent to 27,091 points. The Nasdaq Composite climbed 1.0 percent and closed at 8,326 points. Short note on the chart analysis: The high-tech index broke yesterday’s second price gap. The first one is still below 8037 points. The star of the evening was the S&P 500, which closed 0.6 percent higher at 3,039 points. The index thus marked a new all-time high.
Everything is waiting for the Fed
Investors are likely to hold back a little today. Tomorrow, Wednesday, the Federal Reserve will decide on the key interest rate. The majority believes that the Fed will cut the interest rate by 0.25 percentage points in order not to let the economy cool down.
Tension at Sterling
It remains interesting with Sterling. Should Prime Minister Boris Johnson prevail with his plans for a new election, the Pound should strengthen strongly. According to all current polls at the ballot box, Labour would receive the receipt for the latest sabotage tactic, which ultimately played into Brussels’ hands and weakened its own country’s negotiating position. Yesterday Johnson initially failed with the new election plan, as a two-thirds majority is required under the existing law, the 2011 Fixed-term Parliaments Act. However, Boris now wants to introduce a new law that could allow new elections by simple majority. If he wins, the constant Brexit disruption manoeuvres in the House of Commons should be a thing of the past.
This is what the day brings
In addition to the entertaining political theatre in the House of Commons, the US accounting season also occupies traders.
In the USA the pending house sales will arrive at 3pm fort he month of September.
At the same time, consumer confidence is to be reported for October.
And as mentioned, the two-day meeting of the Federal Open Market Committee (FOMC) of the US Federal Reserve begins.
As always, you can find the complete overview here: Market Mover
The Bernstein Bank wishes you successful trades!
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