21/02/2019 – 12:00: The Bulls are making a run for it – but clearly got repelled by important resistance lines. First, the DAX attempted to break out of its sideways range on Thursday morning. Even the Dow Jones did not make it past an important barrier on Wednesday evening. In addition, performance on the Asian stock markets was mixed. The topic of the day is once again the hope for an agreement in the Trade War between China and the USA. Here are the positive news across the screens.
DAX Targets 11,400 Points
On the Frankfurt floor, there has recently been a widespread hope that the German benchmark index will now leave its short-term sideways trend for good. The stock market players have their sights set on the 11,400 mark. After an early high of 11,470 points, however, the DAX fell back.
Deutsche Telekom’s figures caused little stir – the Group continues to benefit from the upswing of its US subsidiary. Deutsche Telekom reported a 5 percent year-on-year increase in earnings before interest, taxes, depreciation and amortization to EUR 23.3 billion in 2018, adjusted for non-recurring effects. However, profit fell by more than a third to EUR 2.2 billion; a year ago, a billion-dollar special income from the U.S. tax reform had caused the cash register to ring. Henkel delighted investors with the announcement of the highest dividend in the company’s history. The consumer goods group intends to pay a dividend of 1.85 euros per preferred share. Even though, last year sales shrank minimally, and operating profit rose only slightly.
Dow Fails at 26,000 Points
Wall Street had shown itself cautious on Wednesday: The Dow Jones index ended the day with a slight gain of 0.2 percent at 25,954 points. No wonder that the Dow failed against the barrier of 26,000 points: at the beginning of December last year, the leading US index had not managed to cross this hurdle – the share price slid by more than 4000 points. And stock market players don’t forget anything. The market-wide S&P 500 also made progress on Wednesday by 0.2 percent to just under 2,785 points. And the Nasdaq Composite closed with a barely noticeable gain of 0.03 percent at 7,489 points.
In Japan, the Nikkei index advanced by 0.2 percent to 21,464 points on Thursday – the fourth consecutive day of gains for the Japanese leading index. However, the Shanghai and Shenzhen stock exchanges each fell by just under half a percent.
Fed Apparently Holding Still
According to the minutes of the most recent interest rate meeting, the Fed is uncertain about the future price; however, in the Fed’s covert speech it appears that the central bank does not intend to raise interest rates for the time being. Low interest rates are water on the mills of the stock market.
New Hope in the Trade War
Latest news from China are giving the bulls from the stock exchange some nutrition: According to media reports, the talks that have been underway for months to settle the Trade War are moving forward. According to insiders, Washington and Beijing are working on declarations of intent regarding the most important US demands on the People’s Republic, such as patent rights or agricultural products. The negotiators have also drawn up a list of measures under which Beijing will reduce its trade surplus with the US.
Economic Data from the USA
To look out for on Thursday: in the afternoon at 2.30 p.m. a bunch of economic data could move Wall Street and the Frankfurt Stock Exchange, but also currencies and bonds. The new orders for durable goods, the indices of the Philadelphia Fed and especially the first orders for unemployment assistance in the USA will be reported. The Purchasing Managers’ Index for the manufacturing sector will also follow at 3.45 p.m.. As always, particularly disappointing or gratifying figures are likely to cause high volatility.
What to Focus on with Oil
At 5 p.m. the EIA (Energy Information Administration) will report the change in the storage volume of US crude oil, specifically the status of the West Texas Intermediate lead location. This could open up interesting opportunities for WTI, petrol futures and US equities in the energy sector.
Behind the scenes there is another drama with oil: the US Congress is currently forming the front line for the so-called NOPEC legislation. This is intended to punish the members of the OPEC cartel up to the expropriation of US assets if they manipulate the oil price upwards. On the Hill, the project was repeatedly postponed in order to not burden relations with Saudi Arabia. But since the Khashoggi murder Riyadh has gambled away considerable credit. Trump has also attacked OPEC several times on Twitter with a view to his voters because of high gasoline prices.
As you can see, the day once again offers a lot of opportunities.
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