03.12.2019 – Daily Report. Counter-movement after the sale: The DAX rises again on Tuesday morning. The day before, investors had pulled the cord after a solid start due to new tariff threats from the USA. This time not only China was in the crosshairs.
Frankfurt attracts again
After the losses on the world’s stock markets of the previous day, the DAX has recently risen again: On Tuesday morning, the DAX rose by 0.7 percent to 13,060 points. Yesterday, Monday, Germany’s leading index had still started trading firmly, only to fall together with Wall Street. For the first time since the beginning of November, the DAX slipped back below the 13,000 mark. The American fear indicator VIX rose by 18.15 percent to 14.91 points.
Fear of the global trade war
Prices fell to their knees because investors feared a global trade war. US President Donald Trump announced punitive tariffs on Argentinian and Brazilian steel and aluminium via Twitter. Washington accuses the two Latin American states of manipulating their currency to support exports. Shortly thereafter, the American government described the French digital tax as “discriminatory” against large American Internet corporations. As a result, penalties of up to 100 percent are now imposed on French imports worth around 2.4 billion dollars. We are looking forward to the news from the NATO summit.
The Causa China
And then there was China. It was not only the new tariffs described above that strengthened investors’ scepticism that Phase 1 might not work out after all. On the one hand, the “Global Times”, which belongs to the Communist Party, announced that China would soon prepare an “unreliable entity list”, i.e. a list of unwanted US companies and individuals. In an interview with Fox News, US Secretary of Commerce Wilbur Ross also affirmed that it is solely up to China whether there will be a customs deal this year or not. If Beijing resists, the punitive tariffs would in any case be increased by 15 December. China, however, wants all existing tariffs to be withdrawn before a deal is made – but this would put the US out of hand with its most effective means of coercion.
Mixed tendency in Asia
In the Middle Kingdom, bargain hunters attacked on Tuesday: the CSI-300 climbed by 0.4 percent to 3,851 points. In Tokyo, on the other hand, the Nikkei index fell by 0.6 percent to 23,379 points.
New York in shock
In view of yesterday’s news, the Dow Jones Industrial closed at minus 1.0 percent at 27,783 points, just above its daily low. The S&P 500 lost 0.9 percent to 3,113 points. The Nasdaq Composite slipped by 1.1 percent to 8,568 points.
This is what the day brings
The calendar of events on Tuesday brings only a few really important events, the overview can be found as always here: Market Mover
The Bernstein Bank wishes you successful trades!
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