26.07.2019 – Daily report. The day after, the bulls treated her wounds. ECB boss Mario Draghi had not delivered as hoped. After the crash, the DAX tries to stabilize. But the interest rate fantasy is out of the market for now.
The DAX must fight
The stock market wanted more cheap money very quickly. But Europe’s currency guardians refused. They announced that interest rates would probably remain at their current level or “below” for at least the first half of 2020. At yesterday’s meeting, the ECB left the key interest rate at zero for the time being, and the deposit rate for banks also remained unchanged at minus 0.4 percent. It soon dawned on investors that they would have to wait at least until the next interest rate meeting in six weeks’ time for the big money flood. As a result, the DAX submerged.
Since investors in New York also fled into the sidelines, there were only a few buying arguments left. Most recently, Germany’s leading index oscillated with a plus of 0.2 percent, just under 12,400 points. In view of the tripping steps, the recommendation remains once again to trade CFDs with Germany’s best CFD brokers – the leverage also brings profits in the sideways market. However, those who are involved in online stock trading are likely to tick off this Friday in view of the lack of big dates. Which is not bad given the persistent heat.
Skepticism in Asia
Asia was also indecisive in the morning. Especially as concerns circulated on the US floor that the Federal Reserve might fall short of expectations at its meeting next week. This Friday was accompanied by reports of an impending intensification of the Japanese-South Korean trade conflict. The dispute over compensation for Korean forced laborers during Japan’s colonial rule between 1910 and 1945 continues to smoulder. In view of this conflict, the Nikkei in Tokyo dropped by 0.5 percent to 21,658 points. The Chinese CSI 300 saved a plus of 0.2 percent to 3,858 points.
New York hesitates
On Wall Street, investors had been hiding on Thursday. Most brokers expect the Fed to cut key rates by at least a quarter of a percentage point in the coming week. But what if not, as in Europe? The disappointment would be pre-programmed as in Frankfurt. The Dow Jones index closed the day at minus 0.5 percent at 27,140 points. The S&P 500 also fell by 0.5 percent to 3,003 points. And the Nasdaq Composite slipped 1 percent to 8,238 points.
Interest rate cut in Turkey
There remains a short look to Ankara. Yesterday the Turkish central bank lowered its key interest rate for the first time in four years. With the strong move from 24 to 19.75 percent, politicians intervened massively in the currency market. At the beginning of July, Recep Tayyip Erdogan had pushed the central bank governor out of office and replaced him with his deputy. He now delivered as requested. Interestingly, the lira has recently shown itself to be relatively stable – low interest rates normally put pressure on a currency. Does the market now see the lower interest rate as a self-confident sign that the economy is about to recover? Or is someone buying Turkish lira in the background? In any case, the lira collapsed immediately after yesterday’s announcement, only to subito miraculously recover afterwards. Perhaps the central bank had just destroyed a few shorts with support purchases. We are keeping an eye on developments.
This is what the day brings
Even vigilant investors are unlikely to find much of an incentive for new investments this Friday.
On important dates, only the publication of the American gross domestic product for the second quarter is scheduled. The figures are expected to be available on the tickers at 2.30 pm.
The Bernstein-Bank wishes successful trades – and a happy sunny days!
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