Dusseldorf The leading German index has reached a new rally high. With today’s daily high of 14,583 points, the Dax has continued its 2700-point rally since the end of September. The previous high was 14,571 points. The Dax is currently up 0.6 percent at 14,573 points.
This rise in midday trading comes as a surprise because at 2:30 p.m. the US labor market data is an important economic indicator. He can bring new impetus to the trade.
The trading week so far and especially yesterday have shown how difficult it was for the Dax to break the 14,500 point mark. Since Monday of the past few weeks, the leading index has been listed in a range of comparatively low 250 points. On the upper side it was 14,571 points until today, Friday, below the mark of 14,321 points.
So there is a good chance that the Dax will continue to rise. With many indicators pointing to a setback, today’s price rise is likely to have still caught many investors on the wrong foot. They must probably follow the rally. Although many institutional investors have closed their short positions according to the Frankfurt Stock Exchange survey, the picture is different for private investors. According to Boerse Stuttgart’s Euwax sentiment, the proportion of put derivatives is still at a very high level and has changed little over the past three weeks.
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US jobs report in focus
The US labor market report for November is likely to be decisive for further developments. The number of new jobs created in November could be the lowest since late 2020. Experts expect 200,000 US nonfarm payrolls to be added compared to 261,000 in the previous month.
The same applies as it has for a long time: the better the report, the worse it is likely to be for the stock market and vice versa. Because a significantly slower growing labor market is taking additional pressure off the US Federal Reserve, which had recently braced itself against rising inflation with large interest rate hikes.
The rather weak jobs report from the private ADP agency, with just 127,000 new jobs added, has already shown a trend, although initial jobless claims remained low on Thursday.
However, this trend is probably already priced in. In order for concerns about interest rates to increase again, the US labor market would have to surprise on the upside following the speech by US Federal Reserve Chairman Jerome Powell on Wednesday evening.
Investors will also pay attention to wage growth. Most recently, the annual wage increase has declined or at least remained constant for seven months in a row. A renewed decline would be another indication that the US central bank is succeeding in avoiding the dreaded wage-price spiral.
Support for the leading German index comes from the USA: there the S&P 500 surpassed the much-noticed 200-day line last Tuesday, i.e. around two weeks after the Dax, and remains above this mark. The fact that the German stock market index is a quasi trendsetter for the big “US brother” is one of the unusual events.
On the German stock market, this average line, formed from the prices of the past 200 trading days, is currently falling by around two points and is at 13,538 points. This line should turn by January 2023 at the latest and then be “tested” again by the leading index. At least that is what the typical scenario of a sustainable trend reversal looks like, about which there has been no doubt so far.
Inflation is a thing of the past on the foreign exchange market
The comeback of the euro continues. At $1.054, the common currency is trading as high as it was last in June. In the past four weeks, the euro has climbed more than 7 percent against the dollar.
Commerzbank foreign exchange analyst Ulrich Leuchtmann is also surprised by the speed with which the foreign exchange market anticipates future developments. It is about pricing out the fear of inflation on the foreign exchange market, which is now running faster than expected.
A significant drop in inflation now seems so certain that the time after that is now “played” on the foreign exchange market. And it doesn’t look positive for the dollar because inflation was the trigger for the aggressive Fed policy that propelled the dollar to the top of the G10 currencies, the world’s major currency pairs, in 2022, says Leuchtmann.
He sees the greatest risk in Commerzbank’s price target of $1.10 against the euro being reached earlier than expected.
Look at individual values
Real estate values: Real estate values, which are considered interest-sensitive, are in demand on the stock market. Vonovia ended up at the top of the Dax with an increase of almost three percent, industry members such as Aroundtown and Tag Immobilien rose by 4.7 percent and 3.8 percent respectively, LEG and Deutsche Wohnen each climbed by more than two and a half percent.
With Grand City at the top of the SDax, the increase was almost 5.7 percent. Shares in the real estate investment provider Patrizia advanced by 2.4 percent, with an increased portfolio forecast following an acquisition in Denmark also providing tailwind.
stabilizer: The company’s dividend proposal has been well received by investors. The titles gain 1.7 percent to 63.05 euros. The industrial and automotive supplier proposes a dividend of 1.75 euros per share for 2022, 50 cents more than in the previous year. “This is clearly above market expectations,” said one trader.
Here you can go to the page with the Dax course, here you can find the current tops & flops in the Dax.