Dusseldorf The German stock market is up on Wednesday. The Dax closed 0.8 percent higher in the evening at 15,506 points. On Wall Street, on the other hand, the indices were mixed.
Overall, the German stock market is holding up well. After the impressive 3800-point rally since the end of September, the leading German index has been moving sideways in a range of around 400 points since the beginning of February.
This development can continue for a few days. The past sideways phase ended after 15 trading days, the previous one had lasted eleven sessions until the end of December.
The focus on the upper side is the high for the year at 15,658 points, the lower limit is 15,246 points. Even if the leading German index is considered overheated, i.e. has climbed too quickly: only if the Dax falls below this lower limit of 15,246 points will there be a signal for a major setback on the German stock market.
Although the US inflation rate, which was higher than expected on Tuesday, caused greater price fluctuations on the German stock market, it did not change the sideways trend overall.
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Still, the new US consumer price data is a red flag. Because higher interest rates are currently being priced in again on the bond market and the chance of interest rate reductions this year is being priced out.
According to the Chicago futures exchange’s CME Fed Watch tool, the US inflation rate means that for the first time there is a majority in favor of a base rate above the five percent mark at the end of the year. In this case, the US Federal Reserve (Fed) would hike interest rates by a further 50 basis points overall this year.
Even before the release of US consumer prices, expectations were at 25 basis points, coupled with a maximum interest rate of 5 percent at the end of 2023.
All of this also ensures that yields on the US bond market continue to rise. The value of a ten-year government bond has risen from 3.37 percent at the beginning of February to 3.73 percent today. After the publication of the inflation rate, the return rose by three percent. If this increase continues, further price gains on the stock markets are difficult to imagine.
Because the rally on the German stock market since October was accompanied by falling yields on the US bond market. The multi-year high for the US Treasury, for example, is only a few days away from the yearly low for the Dow Jones stock index.
The technical chart constellation does not bode well either. Jörg Scherer, head of technical analysis at HSBC Germany, sees the downward trend in yields since October as over and believes that yields could even rise to last year’s multi-year high of 4.34 percent.
Positive US retail sales
At the beginning of the year, consumer demand picked up significantly, even if strong car sales and higher petrol prices played their part in this development. This is shown by the retail sales in the USA, which were published on Wednesday. In January, there was an increase of 3.0 percent after minus 1.1 percent in the previous month. The consensus estimate was up 2.0 percent. Excluding car dealers and petrol stations, growth was 2.6 percent.
The analysts at Landesbank Helaba got off to a good start in the first quarter, helped by the solid development of the labor market. “With regard to the interest rate hike expectations regarding the Fed, the figures should once again have a supportive effect, especially since business sentiment in the New York region is back on the road to recovery and has surprised positively,” says Helaba analyst Ralf Runde.
Look at the individual values
German Lufthansa: Thousands of passengers suffered delays and flight cancellations on Wednesday due to a global IT breakdown at the Kranich airline. The computer systems for boarding, among other things, have not been operational since morning. A crisis team met at the Lufthansa headquarters at the airport.
All Lufthansa domestic flights were initially canceled and passengers were asked to switch to the train. All of the airline’s departures were stopped in Frankfurt. Shares fell for most of Wednesday’s trading, but closed 0.1 percent higher in the evening.
Economy: The shares climbed by 11.6 percent and were thus at the top of the SDax small-cap index. The “Handelsblatt” reported, citing financial circles, of talks between the electronics retailer with its Saturn and Media Markt chains and the French retailer Fnac Darty about a possible merger. An insider said that the tests were not particularly concrete, more of a “mutual sniffing”.
Encavis: The wind and solar park operator Encavis experienced unexpectedly high growth rates last year due to the sharp increase in energy prices. Encavis was able to score points with investors: the papers traded in the MDax small-cap index increased by 1.2 percent on Wednesday.
UnitedInternet: The Internet service provider wants to buy back its own shares for around 300 million euros. For this purpose, up to 13.9 million share certificates are to be purchased at a price of EUR 21 each. The United Internet share closed on Tuesday at EUR 19.66.
The company also intends to retire two million of its own shares. The measure will reduce the share capital by two million euros. The withdrawal of treasury shares serves to increase the percentage share held by United Internet shareholders. The stock rose 5.3 percent by the close of trading.
Elmo’s Semiconductors: The Dortmund chip manufacturer achieved record sales and earnings in the past financial year. The expansion of test capacities in Asia is to be continued in the current year. The investments are likely to be around 17 percent of sales, plus or minus two points. In November, the federal government prohibited the sale of Elmos’ wafer production to Chinese investors. Elmos develops, produces and sells semiconductors primarily for use in cars. The stock is up around 10 percent.
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