23.01.2020 – Daily Report. The fear of the corona virus is back. Wall Street is crumbling after S&P 500 and Nasdaq 100 initially set more records. Brokers on the Frankfurt stock market are also waiting in the wings. Especially since a bouquet of important economic data is due in the afternoon – including the ECB’s interest rate decision.
Frankfurt hesitates again
The DAX was down 0.4 percent at 13,468 points on Thursday afternoon. After its all-time high in early trading yesterday, the leading index had fallen back again.
The harsh tones from the USA caused irritation – Washington has again threatened to impose special duties on European cars. US President Donald Trump said on TV channel Fox that if there was no agreement in the trade dispute with the EU, 25 percent punitive duties would be imposed on cars from Europe. In addition, at the World Economic Forum in Davos, US Finance Minister Steven Mnuchin linked the issue to the planned digital taxes of several countries. These taxes would primarily affect US corporations such as Google and Amazon. Mnukhin emphasized that if there were unfair digital taxes, the USA would respond with automobile duties. Otherwise, hardly any broker in Frankfurt expected a change in the European Central Bank’s key interest rate.
Asian stock markets in the red
Investors in Asia also remained on the sidelines. The number of deaths in China has now climbed to 17, with the authorities confirming almost 600 infected patients. Despite the closure of the city of Wuhan, investors fear the spread of the epidemic – after all, millions of Chinese are likely to travel domestically and abroad during the week-long Lunar New Year holidays which begin on Friday.
The CSI 300 lost 3.1 percent to 4,004 points. And the Nikkei dropped 1 percent to 23,795 digits.
New York hesitates after the high
After another record run, the New York Stock Exchange took profits for the time being. Although the Dow Jones Industrial missed an all-time high and closed the year at 29,186 points, a minimal 0.03 per cent lower than the previous year. In contrast, the S&P 500 and the Nasdaq 100 reached new highs in the meantime. The S&P 500 closed 0.03 percent higher at 3,322 points. And the Nasdaq 100 exited trading with a gain of 0.2 percent at 9,189 points.
Sleight of hand against the Fed
Meanwhile, Donald Trump again dealt against the US Federal Reserve. He told the American television station CNBC that their interest rate hikes in the past had been big mistakes. Without the higher interest rates, the Dow Jones would be 5,000 to 10,000 points higher. At the same time, according to Trump, US economic growth would be around 4 percent – almost twice as high as estimated for 2019. We are curious whether this criticism will prompt the Fed to make further rate cuts.
The unexpected often happens
And once again the urgent warning: If you trade CFDs or online stocks on the US stock exchanges, you must keep an eye on the impeachment theatre. An unexpected drop of Trump can trigger a massive price slide. This has just been indirectly confirmed again by Nigel Green, head of the deVereGroup, one of the largest investment advisors in the world.
The bullish financial market is currently simply indifferent to the possible dismissal, the blog “Valuewalk” quoted the manager as saying. Normally a major geopolitical event like the trial of a US president would send shock waves into the financial market, Green said. But this time it was different: “This is because investors see the likelihood of Trump being removed from the White House following a Senate trial as almost zero. Our reverse conclusion: A surprise would be a massive short event.
That’s what the day brings
The calendar contains some interesting dates today, you can find the overview as always here: Market Mover
The ECB starts the afternoon with its interest rate decision at 1:45pm.
At 2:30pm the weekly first applications for unemployment assistance in the USA follow.
Afterwards at 4:00pm the US early indicators are announced.
At the same time the consumer confidence runs over the tickers.
And at 4:30pm the weekly oil report will be published.
The Bernstein-Bank wishes successful trades!
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