19.02.2020 – Daily Report. Cautious optimism on the German stock market. And this despite ongoing warnings of future corona dips in corporate earnings. Hopes remained that China would get a grip on Covid-19. Now the Federal Reserve also came back into focus.
Prices in Frankfurt rise
Investors on the Frankfurt trading floor on Wednesday noon first ticked off Apple’s turnover warning triggered by Corona. The DAX was 0.5 percent firmer at 13,751 points, bringing the all-time high of 13,795 points back within reach. The data on manufacturing industry in Germany in December 2019 also hardly caused any excitement: According to Destatis, orders fell by 0.3 percent compared to the previous month.
However, prior to the publication of the Federal Reserve’s meeting minutes in the evening, the volume was rather low. US futures rose by 0.2 percent. Brokers pointed to declining numbers of new infections during the epidemic in China.
Asia with mixed trend
This naturally also supported the Asian stock exchanges. The CSI-300 in China closed the morning, just barely holding its own, with a minus of 0.2 percent at 4,015 points. In Tokyo, the Nikkei 225 gained 0.9 percent to 23,401 points. Investors rewarded the latest Japanese export data. Although exports fell by 2.6 per cent in January, the Nikkei was able to maintain its position. However, most economists had expected a setback almost twice as high as in the same month last year.
New York adorns itself
Wall Street had a slight setback yesterday. Whereby, of all things, the high-tech indices immediately shook off Apple’s little nose-blow. The Nasdaq Composite even squeezed out a new record finish: the index closed 1.57 points higher at 9,733 points after turning up in late trading. In contrast, the Dow Jones lost 0.6 percent to 29,232 points and the S&P 500 dropped 0.3 percent to 3,370 points.
Only the tip of the iceberg
Analyst Eleanor Creagh from Saxo Bank sent out a warning to stock market participants: that Apple is just the tip of the iceberg. Specifically, “The warning from a member of the $1 trillion dollar tech club is as big a red flag as any for a market priced for perfection.” The effects in China are more drastic than feared: Many factories are still closed, whole cities are closed.
In addition, the investment bank Macquarie has pointed out that steel stocks in China have reached the highest level ever for this season. A clear warning for the Chinese construction market and the
demand for iron ore or coke, Saxo Bank said. The disruption to supply chains would take time to work its way through. But FiatChrysler had already shown what could come: Production in Serbia was stagnating because of missing parts from China.
The Saxo expert had previously written that the disappointing economic data (pre-virus) from Japan in the fourth quarter was only a foretaste of what is waiting for investors in terms of “Downside Surprise”.
What the day brings
The diary brings some interesting events, you can find the overview as always here:Market Mover
In the USA, for example, construction starts and permits for January are received at 02:30pm..
At 08:00pm German time, the FOMC minutes of the Federal Reserve meeting of 29th of January 2020 are published.
Finally at 10:30 pm the API oil report will follow.
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.