Dusseldorf Apparently, investors only see risks on the global markets. In such situations, stocks are usually sold and gold and government bonds are bought in return. But that’s different at the moment.
There seems to be a “sell all” mood. According to asset manager Thomas Altmann, “everything that involves risk is sold for fear of possible further losses”. This also applies to bonds and gold.
The German share index (Dax) was trading at 13,380 points at the close of trading on Monday, a drop of 2.2 percent. The stock market barometer has slipped by more than 900 points since last Thursday.
If there are new negative reports from the major burdens on the stock market such as the war in Ukraine, the corona lockdown in China or rising inflation, prices could continue to slide rapidly. Because then the new sellers would only be faced with a small number of buyers. New orientation marks on the underside would then be the psychologically important mark of 13,000 points and one floor below the low for the year in the form of 12,438 points.
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In the absence of negative news, however, share prices should recover. The area around 13,500 points serves as an orientation mark for further price losses on the underside. There is also the low of the stock market month of April with 13,566 points, which was already fallen below on Monday. Sustainable prices, i.e. at the end of the day and the following day, below 13,500 points have the potential to trigger another wave of sell-offs.
Bond yields climb to new multi-year highs
For a long time, equity investors paid no attention to rising bond yields. This has changed now. Now the courses of the US tech companies, which have kept the S&P 500 up so far, are also crumbling.
Because rising interest rates are generally considered a burden for tech companies. Initially only heavily indebted growth stocks were affected, but now this trend is spreading to profitable US tech giants as well. Amazon has lost a quarter of its stock market value in the past four weeks, and Google’s parent company Alphabet has lost 14 percent.
Because bonds are reporting new multi-year highs almost every day. Last Friday, the yield on ten-year US Treasuries climbed to almost 3.1 percent, this Monday it is already 3.1806 percent, which is the highest level since 2018. The high from autumn 2018 at 3.20 percent serves as the next starting point .
Stock market expert Anton Riedl made a remarkable comparison. The inflation rate in the US reached 8.5 percent, its highest level in 40 years. “The last time inflation was this high in the United States, there was a yield of up to 16 percent on 10-year bonds,” he explains.
There is a similar sell-off mood for German Bunds. As a result, prices slide and, in turn, yields rise. At 1.16 percent, the ten-year bond also reached a new multi-year high, the highest level since 2014.
Bitcoin falls to a new yearly low
The price of gold cannot benefit from the sell-off on the stock market either and continues to fall. Tonight it is around $1860 a troy ounce – a drop of around one percent. In mid-April, only a few dollars were missing to break through the $2,000 mark.
Many investors have already sold gold in the past week. For example, ETFs that have to physically deposit gold experienced one of the largest outflows in the past three months last Thursday.
With Bitcoin, too, one thing is now certain: The cryptocurrency is a risk asset and not a substitute for gold, not a safe investment haven. After losing more than 30 percent in the past six weeks, the price is currently around $33,000, marking a new low for the year.
Look at individual values
Hensoldt: In the armaments sector, Hensoldt stocks initially rose on Monday, but lost 0.4 percent by the end of trading. The US bank Morgan Stanley praised its role as a beneficiary of western armaments investments, and the stock is also traded by experts as a returnee to the SDax.
Infineon: Germany’s largest chip manufacturer has exceeded its own forecast. At the same time, the new CEO Jochen Hanebeck warns: “Global uncertainties are putting a strain on the supply chains, especially the war in Ukraine and the further course of the coronavirus pandemic.” The share fell by around six percent.
Adidas: A series of negative analyst comments weighed on. The shares of the sporting goods manufacturer fall by more than four percent to 173.54 euros. Investment bank RBC Capital Markets lowered its price target from 333 to 265 euros, wealth manager Wedbush reset it from 282 to 235 euros and bank Credit Suisse reduced it from 205 to 193 euros.
SMA Solar: The analyst firm Jefferies has downgraded SMA Solar from “Hold” to “Underperform” and lowered the target price from EUR 43 to EUR 33. This causes the share to fall by around 18 percent. The prospects for the solar group are bleak from the point of view of the analysts. Both supply bottlenecks and the increasingly intense competition are held responsible for this.
Three stocks are trading with a dividend discount this Monday: Deutsche Post (EUR 38.98 closing price Friday, EUR 1.80 dividend), Drägerwerk (EUR 47.55, EUR 0.19) and S&T (EUR 15.91, 0, 35 euros).
Here you can go to the page with the Dax course, here you can find the current tops & flops in the Dax.