05.06.2019 – Daily report. Nice rebound in global trading: Wall Street has risen sharply, the DAX initially wants to continue to rise moderately. The new hope in the customs dispute between China and the USA was not the only push factor. The Federal Reserve indicated that it could intervene to support economic collateral damage caused by a possible trade war.
The DAX is working its way up
After the strong gain on Tuesday, German equities recently wanted to continue rising at a slower pace. On Wednesday morning, the DAX initially rose to 12,052 points before weakening somewhat.
The Federal Reserve was the main source of the buying mood: as always, Fed Chairman Jerome Powell indicated that the central bank could rather open the money supply in the USA further than turn it off in the coming months. At a conference in Chicago on Tuesday, he said the trade conflict between the United States and China would be closely monitored. And “as always” the Fed will react accordingly to maintain growth.
The EU also wants to negotiate with the US. At the G20 finance ministers’ meeting on Saturday, the most important goal is to contain customs disputes, according to the EU’s key issues paper.
Must China give in?
China may soon also be willing to negotiate. No wonder, because the Chinese economy is suffering from the conflict with the USA. The Caixin/Markit Purchasing Managers’ Index for the month of May reached 52.7 points, its lowest level since February. As always, all economic data can be found here: Market Mover
The Chinese CSI 300 closed almost unchanged at 3,597 positions. In Japan, the Nikkei left with a gain of 1.8 percent at 20,776 points.
Battle of the red factions
Meanwhile, a power struggle within the leadership seems to have broken out in China. US futures shot up yesterday as the Chinese Department of Commerce struck an exceptionally conciliatory note. According to this, the differences with the USA should be settled through a dialogue.
Meanwhile, investors on the world’s stock markets ignored the reaction in the English-language Chinese Global Times, which is regarded as the mouthpiece of the Communist Party’s inner circle. “China is softening its stance? Senseless speculation. Beijing is willing to negotiate, but is very convinced that fair talks are impossible without struggle,” twittered editor-in-chief Hu Xijin. Let’s wait and see whether the pragmatic trade faction prevails or the concrete heads in the CP. In any case, there doesn’t seem to be a single front, which strengthens the US position.
Interest rate fantasy in New York
With signals from China and Fed-helped interest rate fantasies, Wall Street had rallied strongly yesterday. Some tech stocks saw a short squeeze and the Nasdaq 100 rose 2.7% to 7167 pips. The Dow Jones Industrial closed with a plus of 2.1 percent at 25,332 points. The S&P 500 also rose by 2.1 percent to 2,803 positions.
The fact that the clear edge of US President Donald Trump is showing success is demonstrated by the example of Mexico. Yesterday Mexican President Andrés Manuel López Obrador said in the port of Veracruz that Mexico could curb illegal immigration to the US if there was a deal in return. A Mexican delegation wants to negotiate the punitive tariffs announced by Trump for Mexico today in Washington. For CFD traders it is therefore worth taking a look at the peso.
This is what the day brings
The calendar is full to bursting today, Wednesday.
First, the ADP Labour Market Report for the US job market will arrive at 2.15pm German time in May.
At 3.45pm the purchasing manager index Service Markit Mai follows (2nd publication).
Thereafter at 4.00pm the ISM United States Non-Manufacturing Purchasing Managers Index will be reported.
The crude oil inventory data of the state Energy Information Administration (EIA) are scheduled for 4.30 pm.
From 8:00pm, investors will analyze the Fed’s Beige Book.
And at 10.15 pm the decision about possible changes in the indices of the DAX family of Deutsche Börse will be made.
What a volatility! Everyone who can now react quickly can be happy, but please only with a CFD broker with a Bafin license!
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