What does it take for shares to fall?

By 29/10/2020News
Morning Stock News

Gold  1883,29

EURUSD   1,1755

DJIA  26698

OIL.WTI  37,475

DAX   11528,82

On Wednesday 28 October, stock markets around the world ended in a major collapse. What served as the trigger? Could it be that German Chancellor Angela Merkel suggested closing bars and restaurants in November to reverse the upward trend in infections? Or that France is planning to introduce a second national quarantine? Or maybe the data that the disease rate in the USA is at its highest level since August? Of course not!

S&P 500

S&P 500

The real reason for the fall is entirely the same as the markets have been growing since spring – the new money that the US Federal Reserve is printing uncontrollably. Everyone was waiting for a new $2 trillion package of measures to support the US economy. Republicans were supposed to be able to push the bill before the presidential election to help Donald Trump.
However, hopes collapsed after Mitch McConnell, the Republican majority leader in the Senate, announced that the Upper House of Congress would not resume work until November 9. And there may not be a package of measures aimed at supporting the economy anymore. After all, Donald Trump has repeatedly stated that he will not admit his loss in the presidential election.
What all experts have been saying for several months now is happening. There is simply no one to buy shares at these prices, without new, empty money coming to the markets. Investors have decided to pause and wait for news from the USA, who will be the next president. In the near future we can expect additional correction in the stock markets.


Oil prices also collapsed on Wednesday. One wonders why this did not happen earlier. Empty Central Bank money will in no way revive real demand, which is beginning to shrink again due to the second wave of coronavirus.
It seems that traders have already forgotten about the negative price of oil, which we saw just recently. This means that a strong downward movement, even to levels of $20-25 per 1 barrel, will trigger a new huge wave of margin calls.

What awaits us today?

04.00 Bank of Japan decision on interest rate
13.30 Annual US GDP data for Q3
13.45 ECB interest rate decision
14.30 ECB press conference on monetary policy

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.