12.03.2020 – Daily Report. No stop, nowhere. Wall Street is once again in an unstoppable decline. The US bans all flights from Europe to the US because of Corona. There is no further specific statement on government aid. Asia and the Frankfurt Stock Exchange are on their knees. Investors’ hopes are now resting on the European Central Bank.
Frankfurt stock exchange falls like a stone
We hope that some time ago you invested some money in puts and shorts as we advised you to do: The DAX dropped below the 10,000 mark in no time at all on Thursday. The leading German index recently dropped 6.8 percent or 708 points to 9,731 digits. Gold was not a bad idea either: the price remained stable at $ 1,643 an ounce. The rush to the depths of German stocks is no wonder, as the bad news poured down like hail on the bulls.
The Kiel-based IfW Institute expects the German economy to shrink this year for the first time since the 2009 financial crisis because of corona. This is hardly surprising, as 56.2 percent of German companies are currently feeling negative effects, as the Ifo Institute reported. But for another reason, US futures had plunged by around 5 percent during the night. Crude oil also fell in price by around 5 percent: WTI still cost 31.39 dollars, Brent 34.02 dollars per barrel.
Disappointment after Trump’s speech
Global trade had promised itself concrete stimuli from US President Donald Trump and received nothing. In his speech from the Oval Office, he promised financial aid for workers who were sick, quarantined or looking after others. But he did not give any details because of the budgetary sovereignty of the Congress. He also said that the Small Business Administration would provide low-interest loans for affected companies and that those affected would be able to postpone tax payments by three months. Particularly bad for the internationally networked economy: Starting Friday, all flights from almost all of Europe to the USA will be suspended.
Earlier, Treasury Secretary Steven Mnukhin had already said that a robust stimulus plan would take a while before Congress adopted it. Politicians of both parties had already expressed skepticism about tax breaks. Of course, the Democrats may use the matter as a weapon in the election campaign.
Corona spreads in Italy
Meanwhile in Rome, after a sharp rise in deaths, the government has imposed the closure of bars and restaurants and almost all shops. Only grocery stores, drugstores and pharmacies remain open. Denmark will close all public schools and day-care centres for two weeks from Monday. Even non-essential public sector employees will be allowed to go home. In view of the fact that the borders in Europe remain open, it is probably only a matter of time before this situation also becomes normal in Germany.
Asian stock markets give way
The Asian stock market also fell to its knees in the wake of the futures. The Nikkei closed 4.4 percent lower at 18,560 points. The CSI-300 in China fell by 1.9 percent to 3,951 points. Beijing took countermeasures: According to the Ministry of Commerce, Chinese industry is recovering from Corona. This was said by the Ministry’s foreign trade director, Li Xingqian, during an online press conference today. China is considering increasing imports. But because of the growing pressure on the world economy due to the global spread of the virus, uncertainty is increasing in China. Meanwhile, India imposed an entry ban on all tourists. The small, positive news from Australia went under: It plans to pump 11 billion dollars into the economy.
Rough crash on Wall Street
Yesterday, the World Health Organization classified the spread of the new corona virus as a pandemic, thus sinking the US stock markets. The Dow Jones Industrial slid deeper and deeper during the day, closing 5.9 percent lower at 23,553 points. Within three years, the index has thus eroded the plus of one year. The Dow has now officially entered a bear market – and an eleven-year bull run is over. It was the longest ever, by the way. The S&P 500 dropped 4.9 percent to 2,741 points. And the Nasdaq 100 lost 4.4 percent to 8006.12 points. Meanwhile, the panic indicator VIX climbed to over 60 points – the last time the index had been that high was at the end of 2008.
What the day brings
The most important date on Thursday will be the Governing Council meeting with the interest rate decision at 1:45pm. The press conference after this is likely to focus on monetary policy measures against Corona.
In addition, the number of weekly initial applications for unemployment benefits in the USA will be reported at 1:30pm.
Ditto the consumer prices for February.
So this will once again be a hot day on the stock exchange – arm yourself! An ideal platform for online trading can be found where the strongest servers are located in these times: At powerful brokers with Bafin license. As always, you will find the calendar of events here: Market Mover
The Bernstein-Bank wishes successful trades!
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