Stock Market Today
Latest update: 25-02-2020 19:44
I constantly follow all the stock market news. Only the stock market news that really sets the stock market in motion I post here.
The whole lot has started moving. While it seems as though China has the corona virus better and better under control, it is now suddenly becoming a problem in many other places in the world.
Naturally, European investors are monitoring the state of affairs in Italy. In Europe and the US, the corona virus is putting consumer spending under pressure. Bad for the economy. But as long as companies do not have to close on a large scale, the economic damage is still limited.
The cause of the falling European stock markets is currently more to be found in the fear of the disease than the concern for economic damage. Anxiety can disappear from the market quickly. However, the consequences of large-scale factory closures not.
The latter is therefore something that I continue to keep a close eye on, especially in Europe. Large-scale factory closures are a red flag and will cause enormous financial and economic damage.
I start by saying that the whole thing has started moving. Falling stock markets that is clear. But there's more. A big flight in government bonds. That has 2 reasons. First, it is a well-known refuge. But it is also responding to more stimulation from central banks.
Lower interest rates and print more money to buy bonds with it. It is now the well-known story of how central banks stimulate a lesser economy.
So large investors are buying bonds en masse because of the economic damage and the expectation that central banks will take action as a result. Hence sharply falling yields with those bonds. The value of a bond moves opposite to the yield. As a result, that value is increasing rapidly.
Temporarily rising faster than the gold and silver prices during this refuge situation. So everything is invested in bonds. However, such a phenomenon is temporary. If the multiple interest rate cuts that are now expected are priced in, the bond market will stabilize.
That lower yield, particularly with regard to government bonds, is disastrous for banks and insurers as it reduces interest rates. Banks and insurers must have high interest rates. So today, worldwide, declining bank and insurer shares.
What you see on a day like this is huge shifts in capital. From shares in bonds. Exchange gold and silver for bonds because they do better on a day like today.
Sell the dollar because of the chance of interest rate cuts and buy the yen and Swiss Franc. So I can continue for a while. This is of course the game of the big boys and their computers. Parties that are skewed in particular must switch quickly.
After a few days the trade will be a bit more relaxed. Of course, on condition that there are no major coronavirus setbacks. Because then the whole game starts again.
The gold and silver price
Today we are bothered by bonds that could temporarily offer a higher return as a port of refuge. That effect will soon be over. Because there is a limit to lower yields that will not fall to -10%.
If the expected lower interest rate is included, the yields do not fall any further and the rise in the value of the bond stops. From tomorrow I expect a quieter bond market. Large profits cannot be achieved.
Then the eye will fall on the refuges of gold and silver. Because in principle they can continue to rise indefinitely. And there the expectation of a lower interest rate and more money pressures still needs to be processed. The mine shares today on average somewhat in the min.
My target price 580 has just not been reached. Today support at 580 has kept it. No bad news about the corona virus and the AEX can go up again tomorrow. The chance that there is no bad news about the corona virus, I think, however, is small. If the AEX drops through the 580, the 555 is the next target.
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