Dusseldorf The futures market follows the central banks: on Friday, the German stock market was dominated by the great expiration date, also known as the witch’s sabbath. In the past, this day was often a “game changer” and this year it has always provided a new direction for the German stock market. However, so far it has always been on the downside.
The trading day on Friday was similar. The German leading index Dax closed 0.7 percent in the red at 15,532 points, but limited its losses at the end of trading. A good hour before the close of trading, it was still 1.4 percent in the red. On a weekly basis, the Frankfurt stock exchange barometer lost 0.6 percent.
For the Dax, the big expiry date already ended at 1 p.m., the settlement rate was 15,530 points and thus below the decisive mark of 15,600 points. At this level, large positions matured on both the put and the call side. The buyers of put options were pleased that they did not expire worthless. The sellers, also known as writers, either had to cut back on the premium they achieved for the sale or were in the red. With the call option it was the opposite.
The Witches’ Sabbath in December is the largest and most important option expiration date of the year. On no other day of the year do more contracts mature than the December expiry. The options and futures on the individual shares only expire towards the end of trading.
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In June as well as in September of this year, the Witches’ Sabbath at the time caused a price slide (see graphic). One can only hope that the big expiry day on Friday will be similar to that in December last year. Back then, too, there was a usual price slide, but then the Dax turned into a Christmas rally on Monday of the following week.
Investor sentiment also speaks in favor of such a spurt at the end of the year. Both the Handelsblatt survey Dax Sentiment and the survey by the Frankfurt Stock Exchange can be rated positively.
Central banks give the gold price a boost
At the end of the week, the Dax was trading at the level before the US interest rate decision. The central banks in Washington, London and Frankfurt did not cause any major movements in the stock market as a whole. Even if the influence of the central banks on the entire stock market is rather small, the effects on individual sectors or asset classes are great. Because the money guards made it clear: inflation will remain high.
The effects can be seen on the US stock exchanges. Yesterday, Thursday, the Dow Jones index with more traditional industrial stocks went unchanged from trading, while the Nasdaq technology index slipped 2.5 percent. The prices of technology stocks are particularly vulnerable to rising interest rates.
Gold, on the other hand, benefits from higher inflation expectations. The price of one troy ounce of gold (31.1 grams) has risen by 2.5 percent since the meeting of the US Federal Reserve and is now back above the $ 1,800 mark. On Friday it was up 0.3 percent.
The trend could continue for the time being: Numerous large German asset managers want to increase the proportion of gold in their clients’ portfolios in the future. This is the result of a study by the consulting company Truth on behalf of the World Gold Council, which the Handelsblatt has received in advance.
Turkish lira in free fall
Meanwhile, the Turkish lira continued to decline: the currency fell to a record low, while the dollar has now risen by more than eight percent to 17.0660 lira. The price trend is breathtaking: yesterday, Thursday, the greenback broke the $ 15 mark for the first time, and on Friday the 16 lira and 17 lira fell in just one day.
The European single currency shows a similar picture. At 19.4159 lira, the 18 and 19 lira mark was surpassed for the first time today, Friday, and the 17 lira mark fell on Thursday.
President Recep Tayyip Erdogan increased the minimum wage by 50 percent yesterday, Thursday, on the grounds that this increase would offset the decline in real purchasing power caused by high inflation.
For the Commerzbank foreign exchange analyst Tatha Ghose, this happened “at the worst possible time”. Because with this decision the feedback between prices and wages was fixed. “That will fuel inflation in the next round and further fuel the crisis,” says Ghose.
Other values are also dramatic: the yield on ten-year government bonds also reached a new record high of 22.45 percent. And in view of a further rise in inflation, the prognoses for this value are rather bleak. A return of over 36 percent is expected by the end of 2022, and by the end of March it should be 27.87 percent.
The amount of credit default insurance to protect against a possible bankruptcy of the Turkish state is also increasing steadily. This CDS (Credit Default Swaps) value is currently 521. For a five-year government bond, professional investors have to pay 5.2 percent of the bond per year in order to protect themselves against default.
On September 9, this value was still 357.8. However, in May 2020 there was already a higher risk of default at 621. For comparison: For the Federal Republic of Germany this value is nine, which is equivalent to 0.09 percent annually.
The Turkish stock market also collapsed on Friday after having risen noticeably in the past few days despite a deterioration in the economic environment. On Friday, the Turkish stock exchange temporarily suspended trading in stocks and equity derivatives twice. The leading index Bist 100 fell by more than nine percent. Traders spoke of a trend reversal on the Turkish stock market. Investors are keeping their money safe and capital flight is increasing.
Look at individual values
Daimler: The automaker’s shares fell 4.2 percent, making them one of the weakest stocks in the Dax. HSBC’s analysts have put the stocks on hold.
Airbus: After initial difficulties, shares in the aircraft manufacturer turned positive and ended trading 1.9 percent firmer. Airbus has received an order for 100 medium-haul jets from Air France-KLM.
S&T: After the minus of more than 31 percent on yesterday’s trading day, the situation calmed down again. The paper closed 8.9 percent in the plus. The British investor Fraser Perring had tackled the IT provider yesterday, Thursday, and put the share price under pressure with serious allegations.
Rational: In the MDax, the commercial kitchen supplier was the biggest winner according to Teamviewer (plus 4.6 percent) with an increase of 4.5 percent. The Deutsche Bank had canceled the sell recommendation for the Rational papers.
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