15.05.2019 – Daily report. “Speak softly and carry a big stick” – the former president Teddy Roosevelt already knew that. Donald Trump imitates him and first calmed down the stock markets with gentle statements about the customs dispute. But investors don’t quite trust the apparent peace – the DAX is crumbling. Poor economic data from China seems to speak for the strong position of the USA. Meanwhile, new figures in the afternoon provide information about the American economic situation – so be sure to keep an eye on your regular market updates.
Dithering in Frankfurt
A little up, a little down – in early trading on Wednesday, the DAX first regained the 12,000 mark before giving back the bastion. The day before, the German leading index had recovered by around one percent after conciliatory words by Trump on the trade war with China. “If they want a deal, it’s absolutely possible,” he stressed.
Robust data from the German economy only caused little buying mood. Between January and March, the gross domestic product grew by 0.4 percent compared to the previous quarter, according to the Federal Statistical Office in Wiesbaden. In the fourth quarter of 2018, GDP had stagnated, and in the third quarter it had even fallen slightly. All data can be found here: Market Mover
In the reporting season, RWE temporarily moved to the top of the DAX on Wednesday after their first quarter was interpreted as solid.
Hope for state aid in Asia
In Asia, investors took action because they immediately interpreted negative Chinese economic data as an argument for new government stimuli. Both retail, industrial production and investment figures were disappointing. The question is how deep the pockets of the red emperors really are – and whether China can help its industry indefinitely if there really is a trade war with the US. The CSI 300 rose by 2.3 percent to 3,727 points. The Japanese Nikkei 225 closed 0.6 percent higher at 21,189 points.
Shrill sounds in China
Meanwhile, the Chinese leadership has sent its editorial offices to the front. The “Global Times” wrote that the USA fought for greed and arrogance – and the morale of the opponent would soon break. China is fighting to defend its legitimate interests. In an indirect appeal to boycott American goods, the paper also conjured up a “people’s war”. The Chinese television station CCTV reported that China was fighting for a “new world”. Well, yes.
Oil market intensifies
Although Donald Trump can by no means count on his media – on the contrary – he is very popular thanks to his hard line: with over 45 percent his approval is higher than it has been for two years. And what values does Europe represent? Appeasement. The Spanish have ordered their warship “Méndez Núñez” home from an American naval unit heading for the Persian Gulf. The mullahs in Tehran will certainly reward this. Meanwhile Saudi Arabia reported that two pumping stations of a larger Saudi pipeline were attacked yesterday by drones loaded with explosives. Although the damage is only minor, it can have political consequences. A television station of the Yemeni Houthi rebels supported by Iran claims the attack for themselves.
Optimism in New York
However, investors on Wall Street on Tuesday had ignored the threat of conflict with Iran and hoped for an amicable settlement between China and the US. At the closing bell, the Dow Jones recorded a gain of 0.8 percent to 25,532 points. The S&P 500 also climbed 0.8 percent to 2834 points. The technology-driven Nasdaq 100 gained around 1.1 percent to 7402 positions.
Fresh US data and Brexit launch in London
We are curious to see if the US economic data coming in this afternoon will underpin the renewed optimism. At 2.30 p.m. German time, retail sales will be reported in April, as will the Empire State Index for May, which provides information about the New York region’s economy. At 3.15 p.m. the Federal Reserve will provide figures on industrial production in April, i.e. capacity utilization. The weekly oil report is also due at 4.30 pm.
Traders in the British pound should also note the date for the next act in the exit drama: British Prime Minister Theresa May wants the House of Commons to vote on the Brexit agreement for the fourth time at the beginning of June.
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.