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Frankfurt – 11/09/2019
Who let the bulls out!?
Despite continuing fears of recession and an unresolved trade dispute: The equity markets remain in a very good mood on Wednesday as well. How long the party mood will last remains to be seen at least until tomorrow, Thursday. Investors are still eagerly awaiting the European Central Bank’s key rate decision this Thursday. Of particular interest is the extent to which the central bank will lower its rate for bank deposits, which will ultimately mean rising penalty interest rates for banks. Some may also wonder whether there could be a new bond purchase program or at least whether the willingness to do so be signalled. Expectations in the stock markets are high, so the potential for disappointment is correspondingly high. If the ECB decision disappoints, the markets will probably react strongly.
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US Markets at a glance
Investors on Wall Street only opted for a positive direction in late trading on Tuesday. Before the interest rate decisions, which are considered to be trend-setting in the coming days, the Dow Jones Industrial was close to minus for long stretches after its latest rally towards 27,000 points. In the closing minutes, however, investors took heart and drove the leading US index into the profit zone. It crossed the finish line 0.3 per cent higher at 26,909 points.
Similarly, the S&P 500 lost some ground and only recovered late in the US trading session.
Far East Markets at a glance
The stock markets in the Far East can increase by a majority towards the middle of the week.
Japan’s leading index, the Nikkei, is currently gaining 0.88 per cent to 21,580.14 points. On the Chinese mainland, the Shanghai Composite tends to be 0.37 per cent lower at 3,010.00 units, while in Hong Kong the Hang Seng is posting a respectable plus of 1.525 per cent to 27,089.75 points.
European Markets at a glance
Investors on the European stock markets will be accessing the market on Wednesday.
The EuroSTOXX 50 shows slight gains after the start of trading.
Investors are looking ahead to coming Thursday when the ECB will announce its next interest rate decision. Next week, the US central bank is on the agenda: “The market is relying on monetary policy stimuli,” a stock market analyst told Dow Jones Newswires.
The German stock market is also on an upward trend towards the middle of the week. The DAX starts trading with a gain of 0.6 per cent to 12,341.84 points. The TecDAX also recovered shortly after the start of trading.
Forex, gold, oil and crypto
The euro is quoted in the morning little changed at 1.1045 dollars. Forex market participants are eagerly awaiting the ECB’s announcement on Thursday.
Prices on the oil market have caught up again after a small slide on the previous day. A barrel of Brent is currently trading for $63.00, and a barrel of the WTI variety costs approximately $58. Reports of a decline in oil reserves in the USA caused prices to rise in the morning. Earlier Tuesday, US President Donald Trump’s surprising release of National Security Advisor John Bolton had sent oil prices plummeting. Bolton is known for his extremely tough stance on Iran, with which the US is crossed because of its nuclear programme.
The gold price stabilised somewhat after its deep dive on Tuesday and is currently traded around the $1,490 mark.
The cryptocurrency market is sliding again this Wednesday. The overall market capitalisation is at $260 billion, and a Bitcoin currently costs $10,100.
Corporate and world news
At lunchtime CET, OPEC presents its monthly report, which should not only be noticed on the oil market. The US producer price index is announced at 2.30 pm CET. And at 4 o’clock still, final numbers from the US wholesale stocks are anticipated.
JPMorgan prepares for zero interest rates
The largest US bank JPMorgan Chase & Co wants to be able to earn money even if interest rates drop to zero in the USA.
JPMorgan CEO Jamie Dimon said at a banking conference that his company had started discussing what charges it could levy if interest rates fell to zero or below. Dimon stressed that he did not currently expect such a low interest rate.
But the fact that the manager is working on such a scenario shows how dramatically the situation has changed. The Fed had raised interest rates gradually, and observers had expected further rate hikes. Instead, the US key rate was lowered by 25 basis points to 2 to 2.25 per cent in July. Should the Fed go as low as 0 per cent or below, then this is likely against the backdrop of a recession in the USA or a global economic weakness.
Ford remains in Europe
Ford, unlike its big US rival General Motors, wants to hold on to its business in Europe. “We have no plans to leave Europe,” said European boss Stuart Rowley at the IAA motor show in Frankfurt. “We’ve been here for more than 100 years and want to stay here for many more”. Ford had announced at the end of June that it would cut 12,000 jobs in Europe – around one in five. Five plants – three in Russia and one each in France and Great Britain – will be closed. A gearbox factory in Slovakia is sold. Ford is to have 18 production sites in Europe by the end of 2020. The carmaker’s European headquarters are located in Cologne. Ford expects that by 2022 about half of its vehicles sold in Europe will have hybrid or electric drives, Rowley said.
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