Morning Call. Market Overview for 06.09.2016

The Big Picture:

The DAX saw profit taking on Monday, dropping 0.11%. This Thursday the ECB is due to meet, investor hopes of further expansive monetary measures being low. With its controversial bond purchases, the ECB has breached the Trillion mark. Since beginning the program in March 2015, bonds to the value of 1,001,947,000,000.00 Euro have been bought. The purpose of the ECB´s actions, is to counteract deflationary pressures in Europe. Also aiming at stimulating the European economies in addition. The aim is to force banks to give out more loans, instead of investing in bonds, by keeping interest rates at artificially low levels. German bonds are already showing signs of supply problems.. The ECB is only permitted to purchase bonds with a coupon above 0.4%, leaving only bond maturing later than 8 years from now filling this criteria. To counteract this dilemma, the ECB cold lower the deposit rate further, leaving bank´s business models under even more pressure. Equally, the ECB is purchasing corporate bonds such as Siemens or BASF, leaving a gloomy situation for savers and pensions. Some banks are actively considering charging their clients negative rates. This leaves investing in equities without an alternative.

DAX

The DAX is in an upward trend. Next important resistance is seen at 10860, support at 10500.

EUR / USD

The Euro is trading sideways in a large trend. Support is at 1,0822, resistance at 1,1429. Short term the Euro is in a downward trend. Short term the Euro is in a downward trend.

USD / JPY

The USD is in an upward trend.

Gold

Gold mid term, is now trending upwards, short term we are seeing a sideways move. The next major resistance is at 1375, support at 1300. Gold is showing some very short term weakness. Gold is nearing its support at 1300.

WTI Oil

WTI oil has reversed. Oil is now in a downward trend.

Overnight:

Due to Labor Day, US markets were closed on Monday. In face of no US impulses, European stocks saw light profit taking. In contrast, the WTI Oil market saw more volatility. At the G20 meeting in China, Saudi Arabia and Russia held talks on the upper limits of oil production. These talks were sufficient to letWTI Oil rise by 6%. By lunchtime the market calmed down and started to retrace downward. In Australia the central bank left rates unchanged at 1.5%, leading to weakness in Australian stocks. Asian stocks trended higher. The USD rose against the Yen and unchanged towards the Euro.WTI Oil rises and Gold is relatively unchanged.

Today´s numbers (CET):

• 08:00 Germany: Factory Orders
• 16:00 US: ISM Non Manufacturing PMI

Company news:

• USA: Quarterly Earnings: No data expected.