20.08.2019 – Daily report. Hesitation and procrastination are the order of the day. After a nice profit on Monday, the DAX is unchanged at Tuesday morning. Investors are keeping a low profile and do not want to position themselves on the wrong side. Because soon the central banks will take over the scepter.
Frankfurt is waiting
The German benchmark index moved ahead without impulse on Tuesday. The DAX quickly gave up its moderate early gains, most recently losing 0.1 percent to 11,705 points. If you trade CFD, then you could discover opportunities in the market here and there even during the current small tripping steps on the Frankfurt Stock Exchange. Another short detour into the chart analysis: The DAX jumped back over the 200-day line with yesterday’s profit and tore a price gap that could normally be closed.
Central banks set the pace
The hesitation on the stock market has a background. Tomorrow, Wednesday, the Fed’s minutes will be published, and the European Central Bank (ECB) will follow a day later. Investors are hoping to draw conclusions from the protocols about the central banks’ planned economic stimulus packages. In addition, news on the ECB’s monetary policy meeting will be available on tickers from Thursday at 1.30 pm. The annual meeting of international central bankers will also start on Thursday in Jackson Hole in the US state of Wyoming.
Trump attacks the Fed
Meanwhile, US President Donald Trump has once again attacked his own central bank. Trump twittered that the Federal Reserve should quickly lower key interest rates by “at least 1.00 percentage points”. Perhaps there should also be a quantitative easing, such as renewed purchases of government bonds. As soon as this happens, the US economy would run “even better”, the global economy would also grow stronger and faster – which, according to Trump, would be “good for all”. And further: central bank chairman Jerome Powell has a “terrible lack of visions”.
Carrot and stick
Meanwhile, the Chinese central bank gave the market its own small stimulus. It announced a reform in the calculation of the reference lending rate. Brokers immediately assumed that the rate would be lower in the future than it is today. Low interest rates improve the prospects for the Chinese economy. Japan’s trading partner’s stock exchange rose by 0.6 percent to 20,677 points, partly because the yen weakened somewhat, which helped export stocks. In China, on the other hand, the CSI-300 closed with a minus of 0.1 percent at 3,788 points. The most recent development in the customs dispute caused scepticism. Washington granted the Chinese smartphone manufacturer Huawei a new 90-day license. However, the US government blacklisted 46 new Huawei business partners.
Kotau off China
Well, the Chinese just have a real opponent in the Americans. In the spaceship Berlin, on the other hand, a not unimportant German publication has just praised Beijing. Read for yourself: “The People’s Republic has proved to be the most successful one-party state in history. About the secret of the first socialist system that works”. And continued: “The Chinese communists have succeeded in transforming the elements of original Maoism into a unique order. As a result, the People’s Republic of China is the most successful one-party system since the development of modern forms of government. Who wrote it: “taz”? “New Germany”? No: “Das Parlament”, the newspaper of the Bundestag. Publisher: The President of the Bundestag, Wolfgang Schäuble (CDU). Yes – CDU. Does that mean that China is a role model for Germany? If politics were to pursue this goal, it would have consequences for the stock market – because we would have to prepare ourselves for tougher state intervention in the economy, including nationalisation.
New York attracts
In the market economy stronghold on Monday, China and the hope for a settlement of the customs dispute were also the determining issues. The Dow Jones bid farewell with a gain of around 1 percent at 26,136 points. The S&P 500 gained 1.2 percent to 2,924 positions. And the Nasdaq Composite climbed 1.4 percent to 8,003 points. Dow, Nasdaq Composite, Nasdaq 100 and S&P 500 have now torn smaller gaps in the chart on their way up.
This is what the day brings
On Tuesday there is a yawning void in the economic calendar. So keep an eye on politics, which will set the pace on Wall Street and in global trading. For traders in the energy market, the US Crude Oil Inventory data (week) from the private American Petroleum Institute (API) at 10.30 pm may be of interest.
The Bernstein Bank wishes successful trades!
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