US equity markets are recovering at the last minute – Handelsblatt


Dusseldorf / New YorkWhat a day of trading! The US stock exchanges initially started in deep red. The leading Dow Jones index lost 785 points or 3.1 percent in the lead, before the surprise round came in the afternoon.

The Dow barely closed down with 0.3 percent or 24.947 points. The Nasdaq Composite closed 0.4% more with 7,188 points. The index of technology stocks had previously sold up to 3.8%. The broad S & P 500 had lost up to 3.2% in the meantime and lost 0.2 percent to 2.696 points.

One of the reasons for the rapid turnaround was the growing hope of investors that the US Federal Reserve would raise interest rates slower than expected for next year. The head of the regional central bank, Robert Kaplan, had Thursday in an interview with the recruited CNBC stock station, "to be patient" and with interest rates to hurry up. Federal Reserve Chairman Jay Powell had previously expressed more prudence.
Thursday morning, a mix of political news and falling market indicators created a bad mood among investors.

The news woke up in the morning Stopping a top manager Chinese telecommunications giant Huawei investors. The chief financial officer of the network equipment provider, also the daughter of the company's founder, has been arrested in Canada and must be extradited to the United States. Washington accuses Huawei of doing business with Iran, against which the United States has imposed a unilateral embargo. Beijing protested abruptly against the pass.

This leaves it completely open again, if the United States and China a lasting solution in the trade conflict said Art Hogan, Chief Investment Officer of the investment bank B. Riley FBR. The provisional Burgfrieden is available.

"It is hard to imagine that this development contributes to a loosening of the tariff dispute between the United States and China," said analyst Gregor Kuhn of Emden Research. It was only Tuesday that the US president, Donald Trump, again threatened the tariffs if he had not reached a global trade agreement.

Jamie Dimon, head of the largest US bank, JP Morgan, was the main source of uncertainty in the markets for the uncertainty surrounding the trade dispute. "You do not know how bad it will be," he said on the sidelines of a conference in Washington. Dimon does not expect the United States and China to reach a final agreement in 30 days.
Meanwhile, entrepreneurs need to rethink their supply chains and investments. "Such things cause uncertainty, which in turn leads to volatility," said Dimon.

The US trade balance deficit has meanwhile risen to its highest level in ten years. With the rest of the world, the United States had a deficit of $ 55.5 billion in October, the Commerce Department said in Washington today. This is the highest value since October 2008.

Meanwhile, the US Congress had passed a transitional budget, thus avoiding the threat of arrest of some parts of the government for now. But the deputies and senators have only postponed the discussion on the financing of the wall on the Mexican border requested by President Donald Trump. The dispute in this regard could come to a conclusion in the next two weeks.

The speculation of the decrease in oil demand following a worsening of the trade conflict has also caused the fall in the price of oil. The OPEC meeting on the subsidy policy, which initially had no concrete results, contributed to the fall in prices. North Sea Brent oil fell 2.1 percent to $ 60.29 a barrel (159 liters).

Driven by the sale of pressure on Thursday, it was mainly technology, as Huawei, according to experts, is one of the world's largest buyers of computer chips. For example, the supplier of Huawei Qualcomm temporarily lost up to 6.4 percent, but eventually ceased activity unchanged.

In contrast, Apple's shares remained under pressure until trading closed, down 1.1%. Car manufacturers also came under the wheels, for which China is an important sales market. General Motors lost 1.2 and Ford 1.7 percent.

The shares of the Boeing aircraft manufacturer held a discount of about 3%, the red lantern. Meanwhile, share certificates had plunged by over 7%. A court in São Paulo had initially suspended the planned acquisition of most of the commercial aircraft activities of its Brazilian competitor Embraer.

In addition, Citigroup's shares aggravated the loss by around 4.5% on Tuesday and lost 3.53%. CFO John Gerspach said Wednesday that the bank could lose its 2018 profitability target due to lower fourth quarter earnings.

Exxon Mobil and Chevron have lost more than 1%. Halliburton, a subcontractor, has seen his shares fall by a good five percent.

Among the favorites of the S & P 500, Hewlett Packard Enterprise shares have increased by more than 6%. The subsidiary of HP IT Incorporated HP Inc achieved surprisingly positive quarterly results.

The observers fear that, after the forced interruption of trading on Wednesday, the big sale begins. "It will be a bloodbath," said Naeem Aslam, head of strategic investments at Think Markets U.K. in London in front of Bloomberg. "The risk of aversion to trade is back". The hope for a rapprochement between the United States and China, which had led to short-term optimism in the market, had disappeared after the arrest of Huawei's manager.

Furthermore, long-term trends drive the pessimism of US investors. They could lead to sustainable and highly volatile selling markets.

For example, the convergence of US and short-term bond yields is worrying. If long-term bond yields fall below those with shorter maturities, this is known in the jargon as "Reverse yield curve" of which. The problem: short-term returns have surpassed the long-term up to before any recession since 1975.

The recession also feeds the fact that numerous stock market values, referred to as The leading indicators apply, weaken. These include, above all, transport inventories, which regularly anticipate macroeconomic developments and weaken significantly at the start of the week.

Finally, analysts fear the Influence of psychology on the world economy and on the stock markets. Many observers see a bearish trend that feeds itself on the motto: if enough market players expect a recession, this too. For example, pessimistic expectations for the future could lead to a reluctance to investment and consumer spending and make the dreaded recession so real.

The Bank of America said today that it expects the sentiment of the bear market to continue until next year. Equity markets could therefore reach new lows in the first half of the year.

Other observers recommend a sober vision – and do not overdo it with the current turbulence. One of these is Maximilian Kunkel of the main UBS bank: "The US economy is entering a new phase, growth is slowing, corporate profits are increasing less rapidly and monetary policy is normalizing," said the head of investment strategists for Germany and Austria, Handelsblatt. "This leads to price turbulence and the return of normal volatility on equity markets, and we do not expect a recession for next year."

As a result, German investors should also remain calm. "Europe can not separate from developments in the United States, but it should not lead to a severe real economic recession, rather the European economic cycle is four years behind the United States," Kunkel concluded.

With agency material



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