24.01.2020 – Daily Report. Gains on the Frankfurt stock market: The DAX immediately closed yesterday’s small downward gap. On a day with little news, the turnaround on Wall Street in particular provided a good mood.
Frankfurt is picking up
Recovery on the German stock market: The leading German index has regained some ground by Friday noon. The DAX recorded a plus of 1.3 percent to 13,561 points. Thus the small price gap between 13,498 and 13,486 points was immediately closed again. A thoroughly bullish signal. But will the recovery bear fruit? Before the weekend this seems quite optimistic.
Little news on Friday
News was rather scarce. After the nose-blowing from the USA regarding the threat of punitive tariffs of 25 percent on European cars, Finance Minister Olaf Scholz (SPD) first spread optimism. In an interview with the US station CNBC, he said that he was by no means pessimistic about the prospects of a trade deal between Europe and the USA.
Yesterday’s ECB meeting was positively received on the trading floor, as the key interest rate remains at zero, as expected. The greening of the European Central Bank caused some brooding: ECB President Christine Lagarde said that in future monetary policy will be much more strongly influenced by climate change. What does this mean in concrete terms and how is this to be achieved? Does the central bank want to lower interest rates as soon as governments pump billions into environmental policy? That looks like a carte blanche for governments to raise taxes – the ECB will already take countermeasures with low interest rates.
Tense wait in Asia
Investors in Asia held back before the weekend. The Hang Seng in Hong Kong closed with a minimal gain of 0.2 percent at 27,950 points. And the Nikkei entered the weekend 0.1 percent firmer at 23,827 digits. The stock exchanges on the Chinese mainland remained closed due to the upcoming New Year celebrations on Saturday – and yesterday investors had already put their money on a safe haven with heavy selling.
In the coming days, stock market traders are likely to keep an eye on the further course of the corona virus. The National Australia Bank analysts believe that the lung disease could reduce economic output in the Middle Kingdom by 1 percent in the first quarter. And Guan Yi, director of the State Key Laboratory of Emerging Infectious Diseases at Hong Kong University told the financial magazine “Caixin” that the current epidemic could be ten times worse than the SARS outbreak in 2003, when 800 people died.
Resident Evil in Wuhan
A little creepy factlet on the side: Apparently reality is currently imitating fiction. According to the financial blog ZeroHedge, Wuhan is probably the real Racoon City from the horror flick “Resident Evil”. It is possible that the virus escaped from the National Bio-Safety Laboratory, which specialises in highly dangerous viruses; the laboratory had already been portrayed by “Nature” three years ago.
Meanwhile, China has sealed off the 11 million metropolis of Wuhan and other cities – a quarantine unprecedented in history. Around 40 million people in China are now affected by travel restrictions. The pathogen has been detected in more than 830 people and the number of deaths has risen to 26 according to official figures. Nevertheless, the World Health Organization (WHO) has not yet classified the epidemic as an international health emergency.
Intraday Reversal in New York
Wall Street had consolidated at a high level on Thursday – prices made a nice catch-up in late trading. The Dow Jones Industrial, for example, closed at minus 0.1 percent and 29,160 points. The Nasdaq Composite even turned the corner and gained 0.2 percent to 9,402 positions. The S&P 500 also made up for its early losses and gained 0.1 percent to 3,326 points.
What the day brings
At the end of the week the schedule is quite clear – all dates can be found here: Market Mover
At 3:45pm the American Purchasing Managers’ Index Manufacturing and Service Markit will run over the tickers for January.
The World Economic Forum ends in Davos.
The Bernstein-Bank wishes successful trades and a relaxing weekend!
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