Dusseldorf On the day of monetary policy, the Dax ended its multi-day sideways phase and laid the foundation for further price gains. The leading German index was 2.2 percent higher at 15,509 points at the end of trading. The MDax gained 3.2 percent. Stock exchanges also benefited from robust corporate balance sheets.
After the interest rate hike by the US Federal Reserve on Wednesday and the Bank of England on Thursday afternoon, the European Central Bank followed suit: As expected, interest rates in the euro area rose by 50 basis points. The central bank is also planning an increase of this magnitude in March. The Fed hike was also expected.
The monetary policy decisions have therefore given the markets a strong boost. Actually, share prices tend to react with discounts to higher interest rates. But the already good mood since the beginning of the year has improved again this week.
“Many market participants do not entirely buy the central bank’s resolute stance,” says Michael Holstein, chief economist at DZ Bank. “This problem could now continue, since the central bank bosses have announced that they will reconsider their monetary policy course after the March meeting.” The market will interpret this as a message for a less strict monetary policy.
Another reason could be investor positioning. Private and institutional investors had increasingly hedged against falling prices in the past few weeks. If they sold these positions into the rising market, this would further fuel the price gains.
Before the ECB, the Bank of England had announced its next rate hike. As expected, the central bank is raising the key interest rate by half a percentage point to 4.0 percent. In view of the persistently high inflation of 10.5 percent recently, the monetary authorities are under pressure to act.
The central bank also signaled that the interest rate peak is approaching and that inflation has probably peaked. “This is clearly the last major hike from the Bank of England, we’re heading towards the end of this rate cycle in March or May,” said Ben Laidler, market strategist at brokerage eToro. The pound slipped after the decision was announced.
Dax ends multi-day sideways phase
The Dax has broken through its sideways range, which is between 14,906 points on the bottom and 15,270 points on the top. Should the leading index be able to hold its own – which is extremely likely in view of the very strong gains on Thursday – then according to the chart technology further price gains could be forthcoming in the near future.
With 130,000 shares held, the trading volume was at a very high level. The highest trading volume so far in the new stock market year was 76 million shares.
Shares in Siemens Healthineers, Vonovia and Porsche (preferential) as well as Infineon and Sartorius were among the biggest gainers of the day with gains of between eight and nine percent. Deutsche Bank was almost the only one on the losing side – but the price slide was very drastic at 6.5 percent.
The bank increased its profits by 159 percent to EUR 5.02 billion, significantly exceeding analyst expectations. However, the institute only owes this return to a positive tax effect.
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DWS, a fund subsidiary of Deutsche Bank, recorded a 23 percent decline in consolidated earnings to EUR 599 million. The reason for this was falling prices on the stock exchanges and the processing of the greenwashing allegations. The company promised a dividend of EUR 2.05 after EUR 2 in the previous year. The papers lost 4.3 percent.
Look at other individual values
Hugo Boss: Jefferies analysts have downgraded the fashion group’s stock from “buy” to “hold”. The papers still gained 0.7 percent.
Siemens Healthineers: The company posted a 30 percent drop in profits in the first quarter. The share was still the strongest Dax value with a plus of nine percent. Also at Infineon (plus eight percent) investors accessed new company figures.
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