11.02.2020 – Daily Report. Was there something? The corona virus is raging, and the death toll is in the thousands. Yet Wall Street has broken all records. And the DAX is also lurking just below its all-time high. So far, the stock market has also ignored the domestic political quake in Germany.
Frankfurt Stock Exchange lurks below the peak
The stock market can be so paradoxical: Regardless of the current dangers for the economy and the business cycle, the DAX had risen by 0.7 percent to 13,589 points by midday. Right at the start of trading, the leading German index had even climbed to 13,638 points. Thus, only 2 points were still missing from the all-time high from January. US futures provided a tailwind, gaining 0.3 percent.
Hope for corona containment
Investors in global trade clung to the hope that China would soon return to normality. In the meantime, the number of deaths has risen to 1,016, according to the Health Commission in Beijing. But: The number of new infections has decreased on Tuesday compared to the previous day. Nationwide 2,478 more cases were reported, bringing the total number of confirmed infections in China to 42,638.
Rising prices in China
Ergo, the investors in China took action in the morning. The Chinese CSI-300 rose by 0.9 percent to 3,952 points. In Japan, the stock exchange remained closed due to the commemoration of the founding of the empire. But Saxo Bank analysts recently warned that equity investors underestimated the risk to the global economy in terms of corona. Instead of looking at stock prices, they should look at commodities. At this point, we had repeatedly recommended looking at copper and oil.
New records in New York
Meanwhile, confidence in the market economy continued to boost Wall Street. In the USA, the strong balance sheet figures were responsible for the buying mood. So far, 324 companies have presented interim reports in the S&P; around 71 percent have exceeded analysts’ expectations. The S&P 500 and the indices on the Nasdaq, for example, reacted with new record runs. The S&P gained 0.7 percent to 3,352 points. The Nasdaq Composite Index climbed 1.1 percent to 9,628 points. The Dow Jones Industrial, which reached a record high of 29,408 last Thursday, rose 0.6 percent to 29,277.
Gold remains in focus
The gold price corrected by a minimal 0.2 percent to 1,568 dollars. The blog “ValueWalk” commented that the price was nevertheless still supported by the Corona fear. According to data from the Commodity Futures Trading Commission, major speculators have capped their bullish positions by 17 percent. Nevertheless, this could be good news for the gold price. For the financial service Kitco has noted that gold is now less vulnerable if speculators sell gold on a large scale.
What the day brings
On Tuesday the diary will bring only a few interesting events, as always you will find the overview here: Market Mover
At 4:00pm the start of the two-day hearing of US Federal Reserve Chairman Jerome Powell before Congress will be important. So if you trade dollars, US Treasuries or US Indices, you should keep an eye on the regular market updates.
The Bernstein Bank wishes you successful trades!
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