Dusseldorf. Investors were once again pessimistic on Thursday. The Dax ended trading around 0.6 percent in the red at 25,267 points. The price for Europe's most important type of crude oil, Brent, once again had a negative impact: a barrel (159 liters) cost a peak of $108. Early on Friday morning, the Dax was trading in positive territory on over-the-counter trading platforms.
Shortly before the weekend, the German leading index could once again be moved by economic indicators from Europe and the USA. Now it becomes clear what mood consumers and industry are in: It starts with the GfK consumer confidence for October, which shows how German consumers are currently behaving.
In the euro area, the M3 money supply will follow for August, and detailed data on Spanish gross domestic product and French wages will also be available in the second quarter. In the afternoon, the focus will be on the USA with incoming orders for durable goods and the sentiment index from the University of Michigan.
China's head of state Xi Jinping and US President Donald Trump met in the USA on Thursday. Trump said before formal talks began that since his first election in 2016, Xi and he had built a "really great friendship" based on mutual respect and the vital interests of both peoples.
However, the meeting initially caused little movement on Wall Street. After the previous day's loss, there were no major price jumps. Fears of escalation in the Middle East and rising bond yields slowed US stock markets.
In late trading, the indices recovered from their daily lows. Reuters had previously reported that US and Iranian negotiators were exploring a gradual exit from the war. Accordingly, Tehran could reopen the Strait of Hormuz and in return Washington could lift its economic blockade against Iran.
Government bond yields have recently risen again after strong US economic data led to rising interest rate expectations in the markets. They make the securities, which are considered safe, more attractive for investors compared to stocks.
The 30-year US government bonds peaked at 5.4583 percent, the highest yield since 2004. While the interest rates for short-term US bonds reflect interest rate expectations, the 30-year bonds show the willingness of investors to finance the national debt in the long term.
The yield on the ten-year US government bond rose to 5.13 percent on Wednesday - reaching its highest level in almost 20 years. However, it attracted one of the lowest levels of demand ever seen at an auction of this duration. According to Kyle Rodda, this is an indication that investors' reluctance to invest in US government securities is not only related to what they see as inadequate inflation compensation, but also to dwindling confidence in the asset class itself.
However, trading volumes in the region remained thin as many trading venues remained closed due to public holidays. There was no trading on the Shanghai Stock Exchange, and the index of the most important companies in Shanghai and Shenzhen was also not traded.
Investor sentiment was dominated by soaring government bond yields, fueling fears of higher global borrowing costs. In Japan, the yield on 10-year government bonds climbed to its highest level since 1996. "The global bond markets are screaming, and ignoring that could be very expensive," warned Nigel Green, head of financial advisor deVere Group.
As soon as risk-free interest rates in the USA are above five percent, every asset has to justify its price.
In Japan, diplomatic talks also caused a stir and moved the currency markets. US President Trump expressed concerns about the weakness of the Japanese currency at a summit with Japanese Prime Minister Sanae Takaichi. This was revealed by Japanese Finance Minister Satsuki Katayama on Friday. Takaichi replied to Trump that an undervalued yen was fundamentally problematic.
In Nuremberg, GfK publishes the figures on the consumer climate. The monthly survey of 2,000 consumers by Germany's largest market research institute is considered an early indicator of consumer spending and the economy. According to the latest forecasts, the index is expected to fall further to minus 27. The index was last positive in spring 2022. This year it has consistently been between minus 20 and minus 30.
In the United States, figures for new orders for durable goods are published. Rising incoming orders signal confidence in the economy. Recent results have been slightly positive. Experts now expect orders to decline slightly, but not to slip into negative territory. Most recently, incoming orders were negative in June.
The University of Michigan presents data on the US economy and expected inflation. The scientists' surveys cover the next twelve months and are considered important early indicators. Inflation should fall again in the future. The inflation rate in the USA was 3.4 percent in August and thus remained stable compared to the previous month.
In the USA, raw materials service provider Baker Hughes presents the number of active wells and new drillings. This data shows how high demand for American oil is and how it will develop given the supply shortages for oil from the Middle East. On Wednesday and Thursday the price of Europe's most important type of crude oil, Brent, rose significantly again.
