The Dax -90%? This is one of Jochen Stanzl’s first sentences. Well, 90% is a bit exaggerated. Stanzl thinks it’s -90 points and sees news from China and Hong Kong as the main reason for the downturn. China with higher inflation and weak car sales, but above all the further escalation in Hong Kong is burdening the markets.
The riots in Hong Kong play a part in the negotiations between the USA and China. The Trump administration has strongly linked the Hong Kong question with the negotiations. Over the weekend, both Trump and Peter Navarro rejected media reports that there would be a withdrawal of existing tariffs. But that is precisely the condition for China to sign the Phase 1 deal. This morning Beijing rejected any comment on the trade talks. It signalled that things are obviously more difficult than expected by the markets. The tone in the Chinese media towards the US has again become much more aggressive, with US Secretary of State Mike Pompeo in particular being pilloried as a “liar” and a “hypocrite”.
Chart-wise, the Dax is now threatened by a sell signal after the strong rally, says Jochen Stanzl (german):