Ifo-Index and customs dispute sink the DAX

Chart Stock Market

 

23.05.2019 – Daily report. The bears determine what happens on the Frankfurt Stock Exchange. The ifo index disappointed. Once again, scepticism about the outcome of the customs dispute between China and the USA gained the upper hand in global trading. Washington is likely to put further Chinese companies from the security sector on the black list.

Investors fear stocks

Weak stocks; Japanese yen, Swiss franc and US bonds firm: roughly speaking, this is the typical pattern on the trading floor when worries about a Chinese-American trade war take over. The DAX slipped by almost two percent by noon. At least at Daimler there is an all-clear for the investors: The stock slipped mainly because of the dividend payout. The situation is less good for Deutsche Bank shares: on the day of the Annual General Meeting, the share price hit a record low of 6.35 euros.

Ifo index disappointed

The Ifo index provided food for the bears: the business climate fell from 99.2 to 97.9 points, the second time in a row. Most analysts had expected only a slight drop to 99.1 points. The mood among the 9,000 managers surveyed is therefore poor. “The German economy continues to lack momentum,” commented Ifo President Clemens Fuest.

Customs dispute continues to weigh on the economy

However, the customs dispute between China and the USA remained the determining issue. According to media reports, Washington is investigating whether it will blacklist at least five other Chinese companies in the security sector. Reactions in the Chinese state press also suggested an escalation.

Overseas sales

Previously, Asian investors had positioned themselves accordingly on the sell side: The Nikkei lost 0.6 percent to 21,151 points and the CSI 300 even lost 1.8 percent to 3,584 points.
Wall Street also closed Wednesday in the red. The Dow Jones index closed 0.4 percent lower at 25,777 points. The broader S&P 500 fell 0.3 percent to 2856 points. The composite index of the technology exchange Nasdaq lost 0.5 percent to 7,750 points. The minutes of the last meeting of the US Federal Reserve hardly moved the prices. As expected, the Fed is sticking to its cautious monetary policy.

May probably on the verge of collapse

Meanwhile, forex traders are once again looking to Britain. According to “The Times”, the unfortunate Prime Minister Theresa May wants to announce her resignation this week. The probable date for her resignation is tomorrow, Friday. Conservatives will probably experience a violent debacle in the European elections and the Brexit supporters will triumph. Against the dollar, the pound slid to 1.2608 dollars, its lowest level since January.

This is what the day brings

The Thursday schedule is well filled. At 2.30 p.m. German time, for example, the weekly US first-time applications for unemployment benefits are being made via the tickers. At 3.45pm the Markit Purchasing Managers Index Service for May follows, ditto the manufacturing index for May. New US construction sales are scheduled for 16:00 in April.
The Bernstein Bank wishes 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.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.