Stock market this week
Latest update: 24-08-2019 00:51
Trade war escalation
Last week was to be dominated by the speech of Jerome Powell. That went a little differently. After the Powell speech, the stock markets did not do much. But when Trump started tweeting, things went completely wrong.
The Chinese had announced import rates earlier that day. Trump called both Powell and the Chinese president his enemies. Came across the FED with much criticism and ordered American companies to withdraw from China. Then Trump called his negotiators together.
New announcements came after the American stock markets closed. On 250 billion in Chinese imports, the rate goes from 25% to 30%. At 300 billion, the rate goes from 10% to 15%.
The 300 billion that would be taxed at 10% on 1 September will now be taxed at 15%. The increases will also start on 1 September. What Trump did on Friday is throwing an economic atomic bomb. This can have enormous consequences.
The gold and silver price
The escalation of the trade war was of course good news for the gold and silver prices. In the short term because of fear. In the longer term because the damage to the world economy is now going to increase.
More stimulation in the form of interest rate cuts and money printing has now come a step closer. The world economy was already doing less and a number of central banks have already lowered interest rates. Other central banks were ready to stimulate more.
Given the further escalation of the trade war, any doubt has been removed. Central banks can now only come up with substantial stimulation packages this autumn. In addition, due to the escalating trade war, we can still expect many measures and angry tweets.
Trump also wants to devalue the dollar and that is also good for the gold and silver price. The gold and silver prices were already in a bull market. If the trade war continues to escalate, we will see a sharp acceleration of that bull market.
The gold price can then rise to $ 1900 within a few months. The shares of gold and silver mines are rising much faster than the gold and silver price itself. If you want to know in which gold mine shares I invest: click here. For silver mine shares: click here
The stock market forecast for this week
It is impossible to give an expectation for the entire week. Monday is going to be an important day. If we get through Monday not to bad, the damage can be limited. But I'm not sure.
The chance of a stock market crash has not been so great in years. Understand me well I'm not predicting a stock market crash here. But a situation like the one that occurred last Friday can trigger a crash.
The bad thing is that we depend on what is going to happen in Asia. The Asian stock markets will open considerably lower on Monday. As long as they manage to keep it under control there, the damage to Europe will remain limited.
But if both the yuan and many Asian stock markets go into a dive, European stock markets will follow. So we depend on how well the Chinese can control their stock markets and the yuan. If things go wrong in China, a chain reaction follows.
Fortunately there is a weekend in between and the Chinese have enough time and financial resources to offer support. Depending on how Monday morning goes in China, it is almost certain that European stock markets will also have a bad day on Monday.
I can't say anything about the rest of the week. I will keep you informed with daily updates.
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The weekly forecast for the AEX
I expect a lower opening on Monday. It would be nice if the AEX would be stopped at 530. However, that depends on how things are going in Asia.
If the damage increases, it is good to know what needs to be monitored. Last December, the AEX made a bottom just above 470.
As long as we stay above 470, nothing is wrong and the long-term rising trend remains intact. Only under 470 will it be a negative story. If it is not possible to catch the AEX at 530, 505 has a good chance.
Nothing wrong either, because after a bottom at 470, a higher bottom at 505 is evidence of a rising trend. Monday is going to be a very exciting day. That does not mean that it is over after 1 day. Volatility can remain high throughout the week.