09.09.2019 – Daily report. New Week, Same Game: Investors Hope for a Settlement in the China-USA Customs Dispute. And a further easing of monetary policy by the European Central Bank (ECB). Of course, the Federal Reserve will have to follow suit next week. So the level of fresh money is rising, which is raising stock prices.
Slight plus on the German stock exchange
The DAX also continued to climb moderately at the beginning of the week: on Monday morning it was 0.3 percent higher at 12,225 points. Since its interim low of 11,267 points in August, the DAX has thus gained almost 1,000 points.
Capital flood ahead
Cheap money is just addictive for more – shares as material assets are just like raw materials an insurance against the destruction of the intrinsic value of paper money. Most investors expect a further reduction in the penalty rate (currently: minus 0.4 percent) that banks have to pay for deposits with the central bank for the ECB Council meeting on Thursday. However, it remains to be seen whether the bond purchases will be continued – the central bank is apparently resisting the move.
It is also a foregone conclusion that the Federal Reserve will cut the key interest rate by 0.25 percentage points in the coming week. This applies not only to Frankfurt, but also to global trade. But beware: if hopes are disappointed, things will quickly go downhill. But if you trade CFD, it won’t scare you because you can go short.
Skid marks from the customs dispute
Investors in Asia also continued to expect an oversupply of liquidity at the beginning of the week. In the People’s Republic of China, the CSI-300 rose by 0.6 percent to 3,973 points. In Tokyo, the Nikkei 225 closed with a plus of 0.6 percent to 21,318 points – after all, this is the highest level since the beginning of August.
And this despite the fact that the tariff dispute is damaging the Asian economy: Imports to China fell sharply in August. Exports also declined, especially to the USA. Investors’ calculations: the government must intervene with stimuli and the Chinese central bank must ensure lower interest rates. Meanwhile, the trade conflict is also affecting the Japanese economy: Gross domestic product (GDP) rose by only 1.3 percent between April and June, projected for the year as a whole – according to preliminary figures, growth should be 1.8 percent. As always, you can find all the data here: Market Mover
New York looks at the Fed
Investors on Wall Street focused on their central bank on Friday. The Dow closed trading up 0.3 percent at 26,797 points. The weekly plus was thus 1.5 percent. The S&P 500 rose by 0.1 percent to 2,979 points on Friday. In contrast, the Nasdaq 100 fell by 0.1 percent to 7,852 points.
Fed Chairman Jerome Powell had said at a conference in Switzerland that the US Federal Reserve was observing a number of uncertainties, including trade conflicts. The Federal Reserve would “react appropriately to maintain growth”. But he also said: “The US economy is in good shape” and “the Fed is not forecasting a recession”. The latest data were as contradictory as these statements: Outside agriculture, 130,000 jobs were created in the US in August, slightly less than expected. However, wages rose slightly more than expected.
New Brexit capers
Meanwhile, the British pound could be exciting again – so be sure to keep an eye on your trading platform with the regular market updates. According to the Daily Telegraph, British Prime Minister Boris Johnson is working to prevent the Brexit shift Parliament is striving for. And this is how it works: Johnson would adhere to the law drafted by Parliament and ask the EU to postpone the date of departure. At the same time, however, he would explain in a letter that the government is against postponing the date beyond 31 October. According to ITV television, the opposition wants to request an urgent debate in parliament today. The government is to be forced to publish its plans for a Brexit without an agreement.
By the way, the matter becomes really turbulent when a case occurs that nobody is expecting yet: If the Queen does not agree to the postponement law passed by the House of Commons and the Lords, it will not come into force. Smile and wave and delay could also cause a stir. A strong volatility of the British pound would then be expected. If you read these lines, you will certainly know more about the Queen’s verdict.
And this is what the day brings
There are only a few important dates on Monday. One of them is consumer credit in the USA in July, which is reported at 9 pm.
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