31.01.2020 – Daily Report. Thus, the recovery is not going to happen: The German leading index started strongly into Friday. However, recently prices have been crumbling again. In the afternoon, important decisions are pending in the USA.
Frankfurt runs sideways
The DAX has recently remained unchanged at 13,158 points. Before the stock exchange opened, the increase was around 100 points. The index should better shake off its losses, as yesterday’s loss has plunged into terrain below the 50-day line. The US futures on the Dow and S&P 500 lost 0.4 and 0.2 percent respectively. News from China continued to weigh on the stock market.
The corona virus continues to spread rapidly, the infection rate is now higher than for SARS in 2002/2003, with Beijing now reporting 213 deaths and the number of confirmed cases in the People’s Republic climbing to around 9,700. Italy reported the first case. The World Health Organization (WHO) has now classified the outbreak as a “health emergency of international concern”. Strangely enough, the WHO stressed that no travel and trade restrictions were necessary.
The Nikkei closed 1 per cent firmer at 23,205 points, the balance for the week is minus 2.6 percent; the return for the whole of January is minus 1.9 percent. Hong Kong’s Hang Seng was 0.5 percent weaker on Friday at 26,313 points. Business on the Chinese mainland stock exchanges remained dormant.
Mixed economic data from China hardly played a role on the stock markets. As expected, the mood of purchasing managers in China’s large and state-owned industrial companies deteriorated somewhat in January. By contrast, the purchasing managers’ index for the service sector rose somewhat.
Signal in phase 1
Meanwhile, the USA appears to be loosening its tough stance on Huawei – perhaps a sign of easing tensions in the direction of Beijing. The Wall Street Journal reported that the Commerce Department has abandoned long-awaited plans to tighten controls on American exports to Huawei. The Defense Department has also opposed tighter export controls. According to the original plans, component supplies from US companies should be prohibited if they contain 10 percent of US technology.
New York is turning up
On the US stock markets, the bulls made a late attempt at recovery yesterday. Stock exchange traders dug up the above-mentioned WHO statement as an argument for this. After the indices had mostly remained in the loss zone during the day, they finally went with profits from Thursday. The Dow Jones Industrial closed with a plus of 0.4 percent at 28,859 points. Yesterday, the Dow had turned up again at the textbook 50-day line. Sometimes the basics of chart analysis are really enough for trading. The S&P 500 finally climbed 0.3 percent to 3,284 points. And the Nasdaq 100 gained 0.4 percent to 9,136 points. Amazon’s share caused a sensation with a jump in price due to strong quarterly figures.
Possible decision in Impeachment
The Impeachment procedure could be finished today. Which should be met with a round of applause from Wall Street. Because with Lamar Alexander from Tennessee an important Republican senator now wants to vote with the Dems for the summons of new witnesses. …who may no longer have the majority for subpoenas. And not only that: Now also an acquittal of Donald Trump is approaching – for him only a simple majority is necessary. For a conviction, two thirds of the senators would have to vote. We’ll see.
Surprise at Sterling
The British pound took a small leap of joy yesterday – the Bank of England left its key interest rate at 0.75 percent. A narrow majority of investors had expected a rate cut. Cable was last quoted at 1.1894 Euro. The BOE lowered its outlook for economic growth: 0.8 percent in 2020 and 1.4 percent in 2021. In November, the forecast had been 1.2 and 1.8 percent respectively. The market now largely assumes that interest rates will be raised by August at the latest. Otherwise: Farewell – at midnight German time, Britain’s membership in the European Union ends.
This is what to expect today
The diary brings some important events at the end of the week.
First of all, at 14.30 in the USA, personal income and expenses for December are scheduled.
At 15.45, the Chicago purchasing manager index for January follows.
And at 16.00 o’clock follows the consumer confidence of the University of Michigan for January.
The Bernstein-Bank wishes successful trades and a relaxing weekend!
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