Conflict between US and China: Dax falls below 11,000 points

Recent tensions between the US and China have sold off on the stock exchanges. The Dax slipped by three percent. Also on Wall Street, the descent continues.

Fears of escalating tensions between the US and China have weighed heavily on the German stock market. The Dax slipped below 11,000 points.

The trigger is the arrest of the chief financial officer of the Chinese smartphone manufacturer Huawei in Canada. The US is pushing its northern neighbor for the immediate delivery of the daughter of Huawei founder Ren Zhengfei. The US Justice has accused the manager of violating the US trade embargo on Iran. China protested sharply against the arrest.

Global stock markets slumped after this news. Analyst Gregor Kuhn of Emden Research said: "Hard to imagine that this development will contribute to a de-escalation in the tariff dispute between the US and China."

Hope for year end rally there

The Dax reached its lowest level in two years with 10,864 points in the afternoon. That was about three percent less than on Wednesday. Thus, the Dax loss since last Monday adds up to around 5.5 percent and in the current year to around 15 percent. The MDax lost 2.8 percent to 22,519 points.

The Eurozone leading index EuroStoxx 50 fell by 2.6 percent. In New York, the Dow Jones index fell 1.6 percent in early trading while the broader S & P 500 lost 1.3 percent. The technology exchange Nasdaq lost 1.5 percent.

With the Dax fall below 11,000 points, the last hope for a year-end rally has now disappeared, said market expert Daniel Saurenz of Feingold Research.

"In addition to concerns about Brexit and the prospect that Theresa May is likely to face a political Waterloo in the British Parliament next Tuesday, hope for a long-lasting ceasefire between the US and China in the trade dispute literally crumbles to dust," commented Jens Klatt, Asset Manager at JK Trading.

Vonovia is increasing

Among the individual stocks, the shares of Vonovia were with a plus of 0.7 percent in the DAX top. Thanks to rising rents in the cities and its recent acquisitions, business continues to be good for Germany's largest real estate group. Vonovia is on course to earn even more in 2019 with its recently raised annual operating profit target.

Speculation of falling demand as a result of an escalating trade dispute also added to the price of oil. Add to that the dispute over a brake, said Börsianer. Recent signals from Opec members indicate that the cut will only be one million instead of the hoped-for 1.3 million barrels a day. The oil grade Brent from the North Sea was reduced by up to 5.2 percent to 58.36 dollars per barrel (159 liters).


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