13.03.2019 – Daily report. Things are getting serious for the British pound: After the recent defeat in the vote for British Prime Minister Theresa May, the chances of a chaotic Brexit have risen. Nervousness is spreading on the currency market. And there is also unrest on the stock market. Because the deadline for the British exit is 29 March. Since the exit is a novelty, it remains completely open how the pound will develop – so chart analysis is probably of little help.
Focus on Adidas and Wirecard
Investors in Frankfurt had to nibble at the recent Brexit debacle in the middle of the week: In early trading, the DAX fought its way up to 11,500 points, slightly below the close of the previous day.
In addition to the events in London, Adidas and Wirecard attracted attention – both shares led the list of losers. At Adidas, the outlook was particularly disappointing, although the sporting goods manufacturer raised its dividend. At Wirecard, a bizarre staffing caused unrest: on Tuesday evening, Wirecard had informed that the accounting manager responsible for Asia had been released. But the “Financial Times” meanwhile stated that Wirecard had “lost contact with the employee”.
Fear of the Chaos Exit
Nevertheless, the Brexit remained the main topic: on Tuesday evening the British parliament had again rejected the EU withdrawal treaty. The vote: 391 votes to 242. This increases the danger of a Brexit without a treaty shortly before Britain’s planned exit from the EU. This could result in severe economic slumps. London reacted in the meantime: As the government announced on Wednesday morning, customs duties on 87 percent of imports are to be abolished. In addition, customs controls at the border to Ireland are to be dispensed. The plan is to be valid for 12 months.
And the voting goes on: In the evening the parliamentarians have to decide whether Great Britain should leave the EU without a Brexit agreement or not. Investors are puzzling as to how things will continue. Volatility on the market can therefore be still guaranteed.
No thrust from overseas
In China, investors first took profits: The Hang Seng in Hong Kong lost 0.4 percent to 28,807. The Nikkei in Tokyo lost one percent to 21,290 points.
New York had shown no clear trend on Tuesday: The Dow Jones Industrial was pulled down by Boeing and closed 0.4 percent down at 25,555 points. The market-wide S&P 500, on the other hand, climbed 0.3 percent to 2792 points. And the Nasdaq 100 gained 0.5 percent to 7201. After all, at 7219 points, the high-tech index had reached its highest level in almost five months.
On Tuesday, the US Consumer Price Index (CPI) for February had made the exact forecast with a plus of 0.2 percent. The inflation rate in the USA thus fell in February to its lowest level since September 2016. This is likely to be confirmed by the Federal Reserve’s wait-and-see attitude towards interest rate hikes.
Who suffers from China?
Let’s stay a little longer in forex trading, which is so important for CFD trading. And let’s take a look at China, where fears of a sustained economic slowdown have recently been cushioned by the announcement of new stimuli. The question is which economies could be pulled down in the wake of China. The answer: Australia and New Zealand. Both countries are reacting strongly to developments in China as it is the largest trading partner for both countries. So traders should keep an eye on these currencies.
Tension in crude oil
The same applies to the oil market: the oil price continued to rise on Wednesday. The reason: Saudi Arabia’s decision to cut production more than previously announced to support prices despite criticism from US President Donald Trump. The question is how US producers will respond. American production is currently at a record high. In the afternoon, new data on American production and oil reserves in the United States are expected.
Whether foreign exchange, stocks or commodities – the Bernstein Bank wishes you every success in your trading!
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