U.S. President Trump once again manages to dominate media coverage with soothing words directed at China and the Federal Reserve, effectively overshadowing negative news such as the International Monetary Fund’s downgrade of global growth forecasts.
This has led Frankfurt investors to anticipate a potential turnaround in American trade policy, sparking a small rally in the DAX. If the index reaches at least 22,200 points by the end of the month, the market could soon revisit record highs. Technically, the overarching uptrend remains intact despite the downturn experienced in March.
In contrast, the situation on Wall Street tells a different story. The S&P 500 has been experiencing a sustained downtrend since the beginning of the year, indicating that the markets are evaluating Trump’s policies as net-negative for U.S. equities. Consequently, international investors are beginning to see advantages in German and European stocks.
However, a modest recovery may also be on the horizon in New York. The sentiment appears to be slowly improving from a very negative baseline, with the possibility that the worst may be behind the market, potentially drawing new buyers into the fray. Nonetheless, investors face the risk of sudden downturns should Trump unveil any shocking developments. On a positive note, the market reacts favorably to good news, suggesting that many investors are ready to re-enter the market.
Written by Jochen Stanzl, Chief Market Analyst at CMC Markets
