Dusseldorf On the last trading day of the year, the Dax stepped on the spot. The German benchmark index hovered around the previous day’s closing price on Thursday and closed 0.2 percent up at 15,885 points. This time trading ended at 2 p.m.
The fear of Omikron caused a setback in the Dax at the end of November. In the meantime, he has recovered from the shock and is on a similar level as immediately before the appearance of the new corona virus variant. Over the year, the Frankfurt stock exchange barometer has increased by 15.8 percent. This is the ninth time in ten years that it closes with an annual profit.
Experts surveyed by the Reuters news agency expect new records to be set in 2022. This does not, however, require too much fluctuations: the Dax is currently only 2.5 percent away from its previous record of 16,290 points.
The trend is upwards: Due to the price gains around Christmas, the Dax had a small year-end rally. On December 20, it had dropped to 15,060, but as is so often the case this year, this setback was a buy-signal. Within six trading days, the peak rose by almost 900 points or six percent, with the index recapturing the technically important 200-day line and closing several price gaps – each a sign of strength.
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Due to profit-taking on Wednesday, the Dax fell back into the range of 15,800 to 15,850 points. Such a setback is a normal development after high price gains in a short period of time.
The area above 15,800 points was, so to speak, the lid for the price development of the Dax in the previous month. In rising above this level around the Christmas holidays, that resistance has become support. The fact that the Dax defended this area on Thursday indicates further price gains, explain the chart technicians of the major Swiss bank UBS.
For the coming year, investors will primarily watch the development of global inflation rates and the interest rate situation. Due to the high inflation, the US Federal Reserve has already initiated a turnaround in its monetary policy and is anticipating three rate hikes in the coming year.
Experts expect interest rates to rise accordingly, which would also lead to rising yields on the relevant ten-year US Treasury bonds – an important competitor for stocks. However, this situation is not new. “Over the past 30 years, the experts have forecast interest rates to rise 29 times on average,” Sven Lehmann, fund manager at HQ Trust, has calculated.
“Inflation is not the enemy of the stock markets, but their great friend”
Lehmann has analyzed the development of interest rates on ten-year US government bonds since 1992 and compared them with the estimates of the experts at the end of each year for the next year. The result: “In the 29 years in which interest rates should have increased, it was only eleven times that interest rates were higher at the end of the year than at the beginning of the year,” explains Lehmann.
For 16 of those 29 years, the Philadelphia Fed even forecast higher interest rates for each quarter than the previous one. The predicted rise in interest rates from quarter to quarter only happened three times.
Look at individual values
Individual values were mainly affected on Thursday by so-called “window dressing” measures. By this, stock exchange traders mean purchases and sales of shares that have so far performed particularly well or poorly in order to look as good as possible in the end-of-year accounts.
Sartorius: The shares of the laboratory supplier gained 0.7 percent in value in the Dax. Sartorius ended the full year 2021 as the best DAX value.
Infineon: The stocks of the semiconductor company defied negative news from the technology industry with a price increase of 0.7 percent. A stockbroker referred to warnings from Samsung Electronics and Micron that the ongoing lockdown in the Chinese metropolis of Xi’an could further affect semiconductor production. The region stands for around ten percent of the global production capacities for so-called NAND chips, the expert emphasized.
Siemens Energy: The energy company was one of the losers in the Dax with a price drop of 1.1 percent. In a year-on-year comparison, Siemens Energy is at the bottom of the index. The problems of the wind power subsidiary Siemens Gamesa and the ongoing restructuring in energy technology made the Siemens subsidiary difficult to cope with in 2021
Erdogan’s monetary policy is causing borrowing costs to rise
The downside of Turkish President Recep Tayyip Erdogan’s policy of relying on falling interest rates despite high inflation is evident on the bond market. Since the central bank began to cut interest rates in September, the yield on ten-year government bonds has risen by more than seven percentage points, the financial service Bloomberg has calculated.
On Wednesday it reached a record high of 24.9 percent, on Thursday it was just below it at 24.7 percent. This development shows that investors are concerned that monetary policy is too loose to contain inflation.
Erdogan is constantly exerting pressure on the central bank to further lower the key interest rate – in the past four months by 500 basis points to 14 percent. Contrary to popular economic theories, Erdogan is of the opinion that low interest rates dampen inflation and has already dismissed high-ranking central bankers who opposed his course on several occasions.
The Turkish lira is also coming under increasing pressure against the euro and the dollar. Stock exchange traders pointed to the dwindling confidence of investors in the measures taken by the Turkish central bank to stabilize the lira. The euro rose by up to five percent to 15.132 lira, the dollar by up to six percent to 13.417 lira.
The Turkish Finance Minister Nureddin Nebati, meanwhile, doubted the independence of the US Federal Reserve in an interview with CNN Türk on Wednesday evening and thus caused irritation. When asked by the journalist whether Nebati believed that the US Federal Reserve was following the instructions of US President Joe Biden, the minister replied that if the interests of the United States were at stake, it could well be.
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