30.03.2020 – Daily Report. New losses at the beginning of the week – and a moderate countermovement on the German stock exchange until Monday noon. Of course, Corona is in charge. And oil is being squandered.
Prices in Frankfurt crumble at first
An exciting start to the week on the German stock exchange: Share prices in Frankfurt initially plunged, but then worked their way back up. Most recently, the DAX remained unchanged at 9,633 points. The daily low on Monday was 9,456 points. Golden times for traders. On Friday, the price indicator had still lost more than 3 percent – but the weekly gain was still 8 percent. In a special report on Monday, the economic experts warned of the worst recession since 2009, with German gross domestic product expected to shrink by up to 5.4 percent this year.
The US futures on the S&P 500 are shimmying back up to 0.4 percent. They had slipped after the announcement of the extension of the lockdown guidelines in the USA until 30 April. Fears of a prolonged slowdown in the US and European economies continued to dominate equity trading. And China was also an issue. “The Daily Mail” reported that scientists had warned the British government: China was tricking with its corona numbers – the actual cases could be 15 to 40 times higher than reported.
Moderate losses in Asia
On the stock exchange in China, the CSI-300 fell 1 percent to 3,647 points. The prices were supported by the news that the central bank is supporting the domestic economy with lower short-term interest rates for banks. The Nikkei in Tokyo initially slipped 800 points, but then fought its way back up. At the end of the year, the index recorded a minus of 300 points or 1.6 percent at 19,085 digits.
US stock markets plummet
On Wall Street, investors had played it safe before the weekend. After all, the House of Representatives had waved through the US government’s mega aid program. The Dow Jones closed 4.1 percent lower at 21,636 points. The S&P 500 lost 3.4 percent to 2541 points. Nevertheless, the S&P 500 recorded its strongest weekly gain since 2009 with a weekly gain of 10.3 per cent, while the Dow rose by 12.8 per cent, the strongest increase since 1938. The Nasdaq 100 lost 3.9 percent to 7,588 positions on Friday.
Beware of premature hope
Meanwhile, according to CNBC, analysts warned against chasing a rally in the bear market. Eric Robertsen, Head of Global Macro Strategy at Standard Chartered, said the risk rally lacked substance. Next month, he said, first quarter results from investment brokers and global economic data would show the scale of the economic collapse. Both will exacerbate the weakness in consumer confidence, along with the widespread health crisis and fear of unemployment. Those who believe that the drop in share prices of around 25 percent already prices in these variables could be acting prematurely. Robertsen looked back on 2008: After announcing the aid measures, prices jumped in November 2008 to hit their lows in March 2009. Only then did the real recovery begin.
Daniel Gerard, Senior Multi-Asset Strategist at State Street, also argued that more information from corporations was needed to announce a final low. No one has an accurate picture of the impact of the Corona crisis on profits, he said in an interview with CNBC’s “Street Signs Asia”. Vishnu Varathan, Head of Economics and Strategy at Mizuho Bank, doubted that the various stimuli already had an impact on stock prices. Sales shocks from the quarantine and the disruption of supply chains would continue for a while.
Oil sell-off
Meanwhile, oil prices continued to slide. On Monday, Brent lost almost 8 per cent at its low point, and at 23.03 dollars per barrel was as cheap as it had last been in 2002, with the most recent drop of 4.5 per cent and a price of 26.69 dollars. WTI fell by 3.4 percent to 20.79 dollars. Apart from the current deflationary shock in global demand, there are no signs that Saudi Arabia and Russia are settling their price war.
What the day brings
On Monday, the diary contains only a few interesting events, as always you will find an overview here: Market Mover
In the USA, for example, the pending house sales for February are due at 4:00pm.
The Bernstein-Bank wishes successful trades!
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