Dusseldorf The third attempt to end the downward trend that has been intact since the beginning of January is underway on the German stock market. At first the chances were good. The Dax climbed above the psychologically important mark of 14,000 points and was now at 14,081 points, the daily high. Profits later melted away and the leading index fell below the important mark.
Interestingly, share prices rose even though ten-year government bonds exceeded important marks both in the USA and in Germany. In the US, yields rose above three percent for the first time since December 2018. And in Germany, the yield on ten-year Bunds has exceeded the one percent mark for the first time since June 2015. In fact, rising interest rates are considered a burden on stocks.
According to the technical analysis, the situation with the leading German index is now getting exciting. Accordingly, Jörg Scherer from HSBC Germany says: “The situation is getting worse.”
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On the way up, the leading German index faces crucial hurdles. There is the 50-day moving average, which sets the medium-term trend and is listed at 14,152 points. The downward trend line since the high for the year on January 5 is already slightly above this. This line has now fallen to 14,262 points.
Since then, the Frankfurt benchmark has twice attempted to sustainably overcome this line and failed twice. A sustained break in this line would be the first important signal that the stock market would calm down again with a good chance of dynamic price increases.
“So the current investment motto is ‘make or break’,” says Scherer. “Investors should be rewarded for their patience with a dynamic impulse in the event of an outbreak.”
Investors are only slightly invested
There are many reasons why it could dynamically continue higher after a successful breakout of the downtrend. There is the extremely pessimistic mood among private investors in this country and on the other side of the Atlantic. In such a situation, the majority of investors are not invested. Another sell-off seems unlikely because only a few can still sell.
That could also be why stock prices are rising even though 10-year Treasury yields have soared above their magic levels of 3% in the US and 1% in Germany.
A look at the derivatives market also shows that both private investors and professionals are starting to hedge against falling prices again. At the Stuttgart Euwax, private investors have again started buying more put certificates, which increase in value when prices fall.
The picture is similar on the Frankfurt futures exchange Eurex. The put-call ratio has risen slightly again and is above the average of the past few months.
Conversely, this means that if the Dax rises above the important chart technical marks, many investors are wrongly positioned and have to follow these price gains, thus spurring on the rally.
Dax shares are fundamentally cheap
The fundamental situation is also positive. According to Thomas Altmann from the investment house QC Partners, the Dax shares are currently trading at 14 times the profit. “In the past five years, the average price-earnings ratio was 23,” says the capital market expert.
Should the Dax overcome the downward trend, the highest level of the past stock market month of April will be 14,603 points as the next orientation mark. This is followed by the area around 15,000 points, which is probably the most important medium-term resistance on the way to an even more successful stock market year in 2022.
Figures from BNP Paribas inspire the banking industry
French bank BNP Paribas’ shares rose 4.7 percent in Paris. The quarterly result clearly exceeded expectations, praises analyst Flora Bocahut from the investment bank Jefferies. All business areas contributed to this. The numbers help the entire industry. The corresponding European industry index rose by around two percent. Deutsche Bank shares rose four percent. The Commerzbank paper also increased by 3.4 percent.
Look at other individual values
Price capers on Europe’s stock exchanges
Covestro: Rising costs and the ongoing corona lockdown in China are thwarting the plastics manufacturer’s plans for the year. The stock returned 4.9 percent after.
German postal service: The parcel boom seems to be over for Deutsche Post. Nevertheless, the group is growing faster than expected because the freight business is becoming more lucrative. The paper was still 0.3 percent down at the end of trading.
Eagle groups: Gamblers use the recent record daily loss to get started with the real estate investor. At the top it went up by almost 40 percent to over seven euros after the papers had collapsed by almost 30 percent to a good five euros on Monday. At the close of trading, the premium was 32.6 percent to around EUR 6.80.
Sporting Goods Stocks: An upgrade for Puma SE to “Outperform” by Credit Suisse gave the stocks of the sporting goods group a boost, which was reflected in the price increase of 0.2 percent. The price of competitor Adidas, on the other hand, fell slightly, and the Swiss credit house lowered its thumb to “underperform”.
Scout24: The company is getting a little more optimistic about the fiscal year. As a result, the titles of the online portal operator rose by 1.1 percent.
Here you can go to the page with the Dax course, here you can find the current tops & flops in the Dax.