Offbeat PREVIEW investors should be prepared for price setbacks
MARKETS - Wall Street firmer - Fed protocols in view
Frankfurt, May 20 (Reuters) - Wall Street continues to be dominated by the hope of a rapid economic recovery. The three major stock market indices rose 1.3 percent each on Wednesday. The Dow Jones index of the standard values stood at 24,524 points, the broader S&P 500 at 2960 points and the index of the technology exchange Nasdaq at 9311 points. Too big price jumps are not expected, but also no downward trend, said economist Simona Gambarini from capital economics.
* Experts expect ECB bond purchases to expand
* US job cuts expected to slow down
* Interactive graphic showing the spread of the corona virus https://tmsnrt.rs/3aIRuz7
- by Hakan Ersen
Frankfurt, May 29 (Reuters) - According to experts, recent stock market hopes for a rapid recovery in the global economy could evaporate quickly. The decisive factor is the development of China, which was the first country to be hit by the coronavirus pandemic and the first country to start up its economy again, says Martin Lück, chief investment strategist for Germany, Austria and Eastern Europe at the world's largest asset manager Blackrock. If the upswing stalls despite the command economy there, that would be sobering to the West. "It would mean that there is still a long way to go before the normality that optimistic equity investors are pricing in these days."
Central Banks Buying $2.4 Billion In Financial Assets Every Hour To Support Markets - BofA Report
Bank of America's Flow Show report suggests central banks have hoovered up more than $4 trillion in financial assets over the past two months.Central banks around the world have been buying nearly $2.4 billion in financial assets every hour for the past two months, data from Bank of America suggested Friday, driving risk markets higher even as economies suffer unprecedented damage from the coronavirus pandemic.
Another risk factor is growing tensions with the United States over the Chinese security law for Hong Kong, warns market analyst Milan Cutkovic from brokerage firm AxiTrader. "This could also threaten the trade deal and fuel the fear of a renewed trade conflict in the past two years."
In the old week, however, this topic only played a minor role. Thanks in part to speculation about the rapid development of a corona vaccine, the Dax gained about five percent. "The question arises whether investors simply ignore the massive dangers or whether such a geopolitical event would simply not be drastic enough to drive investors out of the stock markets," said Naeem Aslam, chief market analyst at brokerage firm AvaTrade.
US LABOR MARKET DATA AT A GLANCE
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The economic data climax is on Friday: the US labor market data. The figures from the private employment agency ADP on Wednesday provide a foretaste. On Monday and Wednesday, the barometers for the mood of purchasing managers in the US industry and the service sector, the so-called ISM indices, will be used. "While unemployment has continued to increase, we do expect the ISM indices to stabilize somewhat," said Commerzbank economist Christoph Balz.
On this side of the Atlantic, the German and European purchasing manager indices are on the schedule on Monday as well as the European retail sales on Thursday. The incoming orders of German industry follow at the end of the week. A decline of 20 percent can be expected here in April, after a decline of more than 15 percent in the previous month, says Commerzbank expert Balz.
EXPERTS - ECB MUST REPLACE BOND PURCHASES
In addition, stock marketers are eagerly awaiting the results of the monetary policy discussions of the European Central Bank on Thursday. A rate cut is considered to be excluded. However, pressure is increasing on the ECB to expand its bond purchases, says Ulrich Stephan, chief investment strategist for private and corporate customers at Deutsche Bank. "First, the conflict over an EU reconstruction fund shows that the main burden of fighting the crisis remains with the ECB." In addition, the previous volume of 750 billion euros would probably be exhausted in September.
Also on Thursday, Deutsche Börse will review the composition of its indices. LBBW analyst Uwe Streich predicts that she will probably announce the departure of Dax founding member Lufthansa from the first German stock exchange league. The real estate group Deutsche Wohnen will probably take the place of the airline.
(edited by Christian Götz. If you have any questions, please contact the editorial team on telephone numbers 069 - 7565 1231 or 030 - 2888 5168.)
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