Investors are exercising patience

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11.04.2019 – Daily report. Stockbrokers currently need a lot of restraint. The Brexit will probably walk around like a bogeyman until Halloween. There is no news about the China-USA customs dispute. Before the US reporting season starts tomorrow, there is growing skepticism as to whether the latest bull market will match the results. The DAX, for example, reversed in its early trading session on Thursday.

Brokers Wait for US Quarterly Figures

Investors in Frankfurt have been reluctant to invest recently. The DAX slipped slightly to below 11,900 points. For many brokers there will only be a decision on the direction from tomorrow, then the US reporting season will start in the first quarter with Wells Fargo and JPMorgan Chase. There may be a negative surprise here. For example, the “Frankfurter Allgemeine Zeitung” referred to an evaluation of the Factset information service. According to this, analysts for the S&P 500 anticipate a 4 percent decline in profits for the first quarter compared to the previous year. At the beginning of the quarter, analysts had expected growth of just under 3 percent.

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Brexit postponed until Halloween

We must also wait and see with the British pound. The European Union and the government in London have agreed to postpone the Brexit date until 31 October. However, the United Kingdom can resign earlier if the Brexit Treaty, which has already been rejected several times, passes through Parliament. After all, a hard Brexit will be averted by tomorrow’s Friday. We therefore expect a sustained hanging game in the coming months.

Customs dispute drags on

Investors also need to be patient when it comes to the US-China customs dispute. Apart from the usual speech bubbles, no nutritious news about the tickers has been published recently. US Secretary of Commerce Steven Mnuchin told CNBC that Washington and Beijing had basically agreed on a mechanism to enforce a deal. We are still waiting.

Cold shower from Beijing

After all, there was movement and profit for the bears in China. The CSI 200 lost 2.2 percent to 3,998 points. There was speculation on the floor about government intervention in equity trading. The most recent rumour was that Beijing wanted to cool the bull market and influence the markets, for example through state funds or official comments in the state-controlled press. In addition, brokers suspected that the state wanted to restrict share purchases through loans. Since the beginning of the year, the CSI 300 has gained around a third in value.

Nothing new from the Fed

The minutes of the Federal Reserve’s Open Market Committee in March provided a restrained stimulus for the stock market. The Dow Jones closed yesterday almost unchanged at 26,157 points. After all, the S&P 500 rose by around 0.4 percent to 2888 points in the middle of the week. The Nasdaq 100 even gained 0.6 percent to 7511 points. No wonder, since there was a lot of joy here about the confirmation of the American interest rate policy. According to the minutes published by the Fed yesterday, the existing risks speak for an unchanged key interest rate in 2019 according to a majority of the members. There are still “significant uncertainties” about the outlook.

“Whatever it takes 2.0”

Let us stay with the central banks. Many traders rubbed their eyes in surprise yesterday. For central bank chairman Draghi said that the European Central Bank was ready to adjust all its instruments if necessary. ALL instruments. So the concrete wording yesterday right at the beginning of his press conference. In plain language: If the economy of the Monetary Union were to weaken strongly, the ECB could turn up its money supply again. This reminded some of July 2012, when Draghi said his famous words that the ECB would do whatever it takes to save the euro. So how bad is the situation in Euroland really? The coming weeks will show. Otherwise, the ECB continued to hold out the prospect of not touching interest rates until at least the end of December. As expected, the key interest rate remained at 0.0 percent, where it has remained since March 2016.

This is what the day brings

Let’s take a look at the upcoming dates. At 2.30 p.m. the first applications for unemployment benefits are due, the forecast is 209,000. At the same time the US producer prices are ticking over in March; here the outlook is 0.1 percent. All scheduled events can be found here: Market Mover
We wish you a very successful day trading!

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