13.06.2019 – Daily report. The stock exchange in Frankfurt is surprisingly resilient. Although there is still no agreement in sight in the customs dispute between China and the USA. And despite the meagre performance of Wall Street the evening before. But the latest US economic data is encouraging for many investors.
Moderate growth in Frankfurt
Investors on the German stock exchange recently took a cautious stance, with most prices on the trading platform being presented in green. By midday, the DAX had risen by 0.6 percent.
Investors focused above all on the telecommunications industry. The evening before, the longest auction of German mobile radio frequencies had ended. The four providers – Deutsche Telekom, Vodafone, Telefónica and Drillisch – are paying a total of around 6.6 billion euros for the 5G frequency blocks. That is more than analysts had expected. Deutsche Telekom and Drillisch shares increased.
Waiting in the customs dispute continues
Investors in global trading remained sceptical about the China-US tariff dispute. Few brokers expect an agreement for the G20 summit in Japan at the end of the month. Because there are no concrete plans for a meeting between the American and Chinese presidents. Meetings at ministerial level have still at least been agreed. The customs dispute could therefore continue.
The Chinese CSI-300 closed Thursday 0.2 percent weaker at 3,685 points. And the Nikkei index lost half a percent to 21,032 points.
New York in minus despite good data
Wall Street had suffered slight losses on Wednesday. The Dow Jones Industrial fell by 0.2 percent to 26,005 points. The same applies to the S&P 500, which also fell by 0.2 percent to 2,880 points. And the Nasdaq Composite lost 0.4 percent to 7,793 points.
US consumer prices for May had fallen more sharply than expected. At the same time, optimism among small US companies is at an all-time high, as the NFIB index shows. As always, all economic data can be found here: Market Mover
Inflation is thus sending out two positive signals for the stock market at the same time: First, the current somewhat weaker inflation of the US Federal Reserve does not put any obstacles in the way of a loosening of monetary policy. Secondly, as critics of US President Donald Trump repeatedly claim, America has not yet imported any higher prices as a result of the punitive tariffs against China. Let us wait and see whether development continues.
If inflation remains low, an interesting goldilocks scenario could develop on Wall Street for CFD traders, i.e. the best of all worlds: The Fed could cut interest rates; China’s billions in fines could fill the US coffers; the US economy continues to boom, partly because Chinese goods are being replaced by agile American or international competitors; production returning home to the US supports the US labour market.
Is the war with Iran coming?
The price of oil could put a stop to this calculation. In the Persian Gulf off Oman just two oil tankers were damaged, whether by torpedoes or mines is still unclear. A war against Iran, which of course the USA and Saudi Arabia suspect to be behind the attacks, would sweep away the price pressure that is currently also emanating from the high oil stocks in the United States. Yesterday the situation came to a head when Yemeni Huthi rebels fired a rocket at a Saudi airport and injured over two dozen people.
Todays agenda
In the afternoon we have two important reports to make. First, the American import and export prices for May will be announced at 2.30pm. At the same time the weekly first US applications for unemployment assistance are supposed to arrive.
The Bernstein Bank wishes you successful trades!
Important Notes on This Publication:
The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.