02.12.2019 – Daily Report. A wrong world on the German stock exchange: Despite new, offensive demands from China in the customs dispute, investors are taking action. Some brokers referred to strong data from the Middle Kingdom.
The DAX is on the rise
Investors in Frankfurt were optimistic on Monday morning – the DAX rose by 0.7 percent to 13,325 points. The look back is predominantly friendly: Despite the continuing sideways range, the DAX gained 2.9 percent in November. A joyful return if you trade stocks online. And rather a small yield if you trade CFD. By the way, the German stock market indicator achieved its third consecutive monthly gain in November.
China wants to know
Interestingly, on Monday morning, the global trade ticked off a message from Beijing with a shrug of the shoulders, which actually looks like a real stopper in the customs dispute. According to the Communist Party’s Global Times, China is now demanding the withdrawal of existing tariffs to settle the trade dispute with the US. A promise by the Americans to renounce new tariffs planned for mid-December alone would not suffice. The Chinese have thus officially broken the news embargo surrounding the negotiations and announced publicly what they want.
However, since the futures on S&P 500 and Dow Jones rose by 0.4 percent in the morning, only three interpretations are possible. Either the market does not believe the sometimes quite full-bodied hardliner paper. And hope has not died, for example, because there is still no real countermeasure from Beijing under the pro-democracy laws in the US regarding Hong Kong. For example, the Chinese State Department has banned the mooring of US warships in Hong Kong and imposed sanctions on American aid organisations. However, the trade talks are not affected. Or the brokers assume that US President Donald Trump will give in in order not to plunge the stock exchange into turbulence before the US election. Or some investors already know more. Let’s wait and see.
Profits in Asia
The Asian stock markets rose. Investors were pleased with the unexpectedly strong rise in Chinese industry. The Caixin/Markit index climbed to 51.8 points, up from 51.7 in October. The CSI-300 held up 0.1 percent to 3,833 points. The Nikkei even closed 1 percent higher at 23,530 points. The slightly weaker yen provided a tailwind.
No discount hunting on Wall Street
On Friday only a few US investors had been on a bargain hunt. In the shortened trade after Thanksgiving, many US brokers had been cautious about the customs dispute. On the floor, many were waiting to see whether Beijing would perhaps announce countermeasures on the weekend for the signing of the Pro Hong Kong laws by US President Donald Trump.
The Dow Jones Industrial fell by 0.4 percent to 28,051 points. In November, the Dow achieved a return of 3.7 percent. The S&P 500 also lost 0.4 percent to 3,141 positions on Friday. Its November balance sheet is plus 3.4 percent. The Nasdaq 100 fell by 0.5 percent to 8,404 points at the end of the week. Prior to this, the indices had closed positive for four days in a row and also reached new all-time highs at the same time.
After Black Friday the bears lurk
A look remains at the shopping madness on Black Friday and today’s Cyber Monday – both days are considered important yardsticks for the Christmas business. As the Wall Street Journal has just reported, the bears are preparing for a feast. The short sellers would have increased bets against the brick-and-mortar retailers, the traders who sell their goods mainly in shops and not online. According to financial data firm S3 Partners, short positions on SPDR S&P Retail accounted for 441 percent of available fund shares last week. We are curious whether the expected bear market will occur or not.
Dissent in OPEC
The tension is also growing in the energy market – this week OPEC is discussing cuts in production. The cartel and its allies will meet in Vienna on 5 and 6 December. The signals that have just arrived are rather bearish. For example, Bloomberg, referring to insiders, reported that Saudi Arabia was gradually losing patience with the tricksters and was perhaps no longer prepared to lower its production because other countries were exceeding their quotas. Moreover, Russia pleaded for more patience when deciding on further support policies. It is still too early to negotiate on this issue, Russian Energy Minister Alexander Nowak said on Friday according to news agency Tass. After all, the current agreement on oil production volumes still runs until the end of March.
That’s what the day brings
The diary brings some interesting events, you will find the overview as always here:
Market Mover
It will be exciting at 15.00 for euro and government bonds. Then the new head of the ECB, Christine Lagarde, makes a statement at the Econ hearing of the European Parliament.
At the same time, the ECB’s Monthly Bulletin for November is due to arrive.
At 15:45 the ISM Purchasing Managers’ Index Industry in the USA will run on the ticker in November.
And at 16.00 o’clock the building expenditures arrive in October.
The Bernstein-Bank wishes you successful trades!
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