The newly ignited confrontation in the trade conflict between the USA and China shook the German stock market again on Tuesday. After the most important indices had recovered at the beginning of the week, they now had to accept significant losses again.
The leading index, the Dax, closed 0.6 percent lower at 24,236 points after temporarily falling by 1.6 percent. In the previous week, the stock market barometer reached a record high of 24,771 points and then fell due to the customs dispute. The MDAX index of medium-sized companies lost 1.2 percent to 30,074 points on Tuesday.
The Eurozone leading index EuroStoxx 50 fell by 0.3 percent to 5552 points
After the trade dispute between the world’s two largest economies escalated again on Friday, in which US President Donald Trump (79) again adopted a more conciliatory tone, China spoke up again. The Ministry of Commerce in Beijing reiterated its intention to fight the trade dispute to the end, even if the door for negotiations remains open. Accordingly, port fees for US cargo ships previously announced by China came into force. At the same time, fees for Chinese cargo ships came into force in the USA.
The second wave of corrections on Tuesday hit a stock market that was already on shaky foundations, wrote capital market strategist Jürgen Molnar from the Robomarkets trading company. Below the psychologically important 24,000 mark for the Dax, it will be decided “whether the bulls will find enough strength to stabilize the market or whether the sellers will finally take over.”
Continental and BASF with losses
At the end of the DAX, Continental lost 4.3 percent. The shares were hit by a surprisingly severe profit warning from competitor Michelin. Analyst Jose Asumendi from the US bank JPMorgan sees only a limited impact on Conti because of the French tire manufacturer’s statements, as the main reasons were weaker sales in the US truck and agricultural sectors. However, he assumes that in the second half of the year, the price/mix trends and expectations regarding earnings improvement at Continental will be closely examined from quarter to quarter.
BASF’s shares fell by 2.6 percent. The private bank Berenberg had downgraded the chemical company’s shares to “Sell”. Analyst Sebastian Bray justified his sell recommendation because it is in the unfortunate situation that good portfolio management has little effect in boosting the share price due to unfavorable economic conditions.
Heidelberg Materials at the top of the Dax
At the top of the DAX, Heidelberg Materials benefited from a buy recommendation from the major bank UBS with an increase of 2.1 percent. At the building materials company, a rare combination of price inflation and falling capital intensity led to an increase in return on capital.
As the bottom performer in the SDax small cap index, Atoss Software shares fell by almost 7 percent. The headwind from the economy and risks associated with the international expansion strategy could put a strain on the securities of the provider of software and consulting solutions relating to personnel deployment, wrote analyst Sinan Doganli from the investment bank Oddo BHF.
Gold rush never ends
The gold price continues to know only one direction:
up. The drivers are increasing bets on interest rate cuts in the USA and the demand for safe investments in view of new tensions in the US-China trade dispute. At its peak, the price for one troy ounce (31.1 grams) of gold climbed by 1.7 percent to a new record high of $4,179.5. Silver also achieved an all-time high with an increase of 2.2 percent to $53.6. Since the beginning of the year, the price of gold has increased by 57 percent. Bank of America and Societe Generale now expect gold to reach $5,000 by 2026, while Standard Chartered raised its price forecast for next year to $4,488.
Wall Street with slight gains
Impacted by the US-Chinese trade dispute and significant price losses by large banks at the start of the reporting season, the US stock exchanges first suffered losses on Tuesday, but were then able to contain them.
The leading index Dow Jones Industrial rose by 0.5 percent to 46,221 points. The technology-heavy selection index Nasdaq 100 lost 0.1 percent to 24,942 points. The market-wide S&P 500 rose by 0.2 percent to 6,620 points.
The banks JPMorgan, Goldman Sachs, Wells Fargo and Citigroup opened the US reporting season on Tuesday. The shares of JPMorgan and Goldman listed in the Dow lost 2.4 and 3.2 percent, although the two financial groups were able to convince the analysts. Citigroup shares rose by 1. percent. Wells Fargo rose 4.4 percent.
Oil prices firmer
Oil prices are rising on Tuesday. Brent crude oil from the North Sea rose in price by 0.3 percent to $63.5 per barrel (159 liters). US oil WTI was 0.4 percent higher at $59.7.
The first signs of an easing in the trade dispute between the USA and China are improving the mood on the markets.