01/03/2019 – 12:00: Fasten your seat belt, please: The DAX has completed its short consolidation phase and is on a high flight. In early Friday trading, the German benchmark index reached a new high for the year. The reason were positive news from the stock markets in China. The US-Chinese customs dispute was once again the focus of attention. But that wasn’t the only explosive charge that provided thrust.
DAX at 11.650 Points
The DAX climbed to 11.650 points on Friday morning. Brokers referred to the currently high liquidity of large fund companies – they receive fresh money on the first day of the month, which is usually reinvested immediately.
Happy News from the Red Dragon
Market observers marked news from the news agency Bloomberg as the top news of the morning: According to this, a trade agreement between the United States and China is virtually ready to be signed. We are curious to see whether the world’s two largest economies will now deliver.
But that wasn’t all – a 180-degree turn to the negative news of the previous day drove investors to buy. After the surprisingly gloomy sentiment data of large Chinese state-owned corporations on Thursday, the business magazine “Caixin” now followed up: The index for medium-sized private companies in the manufacturing sector, which the magazine published, rose surprisingly significantly to just under 50 points. Values below 50 indicate a contraction, with figures above this indicating an expansion of activity.
And the index operator MSCI also put a smile on the faces of the Chinese bulls: The weighting of Chinese A-shares in the MSCI Emerging Markets Index will more than quadruple, increasing from currently 0.7 percent to 3.3 percent in the future.
Poor Economic Figures from Beijing
The Chinese Purchasing Managers Index shows that an agreement between Washington and Beijing would urgently be needed: In February, the PMI fell to 49.2 points, its lowest level since the beginning of 2016. In December, this important leading indicator in the world’s second largest economy fell below the critical threshold of 50 points for the first time in two years, suggesting a contraction in industrial activity.
Investors in Asia are on the Buy Side
It’s no wonder that there was a buying mood in Asia. The CSI 300 index with the 300 most important stocks of the Chinese mainland climbed by 2.2 percent to around 3750 points. This week the index rose by 6.5 per cent, and since the beginning of the year the rally has totalled 25 per cent. In Japan, the Nikkei 225 rose by around 1 percent to 21.603 points on Friday.
Wall Street Optimistic Again
Recently, of course, all of this has also put US investors in a good mood: the futures on Dow Jones and S&P 500 each rose by 0.4 percent on Friday morning. The contract on the Nasdaq 100 even rose by 0.6 percent.
A nice reversal to the losses of the previous evening: On Thursday, the Dow Jones Industrial recorded a minus of 0.3 percent at 25.916 places at the closing bell. In February, however, there was a gain of 3.7 percent. The S&P 500 also fell by 0.3 percent to 2784 points on Thursday. And the Nasdaq 100 also lost 0.3 percent to 7098.
Important Publications on Friday
At 2.30 p.m. German time, personal US income and consumption are on the agenda, followed at 4 p.m. by construction spending and the ISM purchasing manager index. In addition, Fed Chairman Powell will lecture on recent economic developments and long-term challenges at the “Citizens Budget Commission 87th Annual Awards Dinner” in New York. Perhaps an important half-sentence will escape him. Otherwise, of course, the US-Chinese customs dispute will move the markets.
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