03.05.2019 – Daily report. The stock market in Frankfurt is developing a life of its own: Although Wall Street had reset on Thursday, Germany’s leading index is still close to its high for the year on Friday. Investors are once again analysing incoming interim reports. Meanwhile, interesting events are taking place in the energy market.
DAX close to annual high
A small surprise on Friday morning: While global trading was more bearish, the German stock market is proving to be quite resilient. The DAX reached 12,395 points. On Thursday, the index reached a new annual high of 12,403 points. However, there was not really much energy in trading on Friday. In Japan and China, the stock market remained closed, so there was a lack of impetus from here.
The sporting run of Adidas provided applause – the share climbed to a record high of 246.50 euros on Friday. In the first quarter, the sporting goods group increased its sales by four percent to around 5.9 billion Euro. The operating result even rose by 17 percent to 875 million EUR, significantly exceeding analysts’ expectations. The same applies to net profit, which rose by 16 percent to 631 million Euro. By contrast, BASF’s earnings before interest and taxes fell by 24 percent to 1.7 billion euros in the first quarter. And this despite sales increasing by three percent to 16.2 billion euros.
Losses in New York
Wall Street had reset on Thursday, with the Dow Jones Index falling by 0.5 percent to 26,308 points. The broader S&P 500 lost 0.2 percent to 2,917 points and the high-tech Nasdaq 100 index fell 0.4 percent to 7,724 points. The oil stocks had caused a sensation: a small slide in the price of oil had burdened ExxonMobil or Chevron.
New record for US oil production
The reason for this development is that oil production in the USA has reached a new record level. In the week ending April 26, the USA had reached a record of 12.3 million barrels per day according to data from the Energy Information Agency. No wonder stocks in the United States reached their highest level since September 2017. Russia also put oil prices under pressure: according to official data, production fell from 11.3 to 11.23 million barrels per day from March to April; however, the target promised in the course of the OPEC production reduction was 11.19 million barrels per day.
Iran remains in sight
Meanwhile, Washington apparently continues to tighten its screws against Iran: According to the Wall Street Journal, the US wants to cut the mullah regime off from the flow of much-needed dollar foreign exchange through a more aggressive application of sanctions. The paper cited Iranian exports of petrochemicals to Singapore and the sale of consumer goods to Afghanistan as concrete targets.
Yesterday, Thursday, the U.S. dropped the last exemptions in the sanctions against countries trading with Iran. This threatens the complete collapse of Iranian oil production on the world market, whose supply has already fallen as a result of the collapse of Venezuela, which is in socialist ruins. Saudi Arabia, together with other allies, however, wants to absorb the loss. We are eagerly awaiting the further development of crude oil.
Waiting for US data
In the afternoon, CFD traders should keep an eye on the regular market updates on their trading platform – from 14:30, volatility could increase rapidly. This is when the April Labour Market Report will be released. Bulls are hoping for a further increase in employment. A too strong increase in incomes could, however, call the Federal Reserve into action with interest rate hikes, as this would fuel the danger of inflation.
The Markit Purchasing Managers’ Index for Services will follow at 15:45 German time.
And at 4 p.m. the ISM Purchasing Managers’ Index for the nonmanufacturing sector is reported. Unlike Markit, the Institute for Supply Management does not only survey private companies.
All forecasts and scheduled economic data are available here: Market Mover
Bernstein Bank wishes you successful trades!
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