Dusseldorf The German stock market has apparently benefited from the ECB interest rate hike. The leading index Dax ended trading on Friday 1.4 percent up at 13,088 points. The daily high was 13,121 points. In the last two trading days, the closing level was just above 12,900 points.
A decisive jump above the psychologically important mark of 13,000 points was a prerequisite for a more sustainable recovery. This was achieved on Friday. Although the stock market barometer managed to surpass this round mark immediately after the start of trading on Thursday, it slipped again just a few minutes later.
With the daily closing price above the mark, the Dax has “a chance of bottoming out, which would be an amazing development given the numerous negative factors,” judges Jochen Stanzl from CMC Markets. The market could end up climbing that same wall of doubt, simply because the bad news is already out. But the signal for this is still missing.
The technical analyst Jörg Scherer from HSBC assesses the situation in a similar way. “A spurt over this key hurdle would complete the ongoing stabilization process and create a short-term bottoming out,” said the expert before the stock market opened.
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A positive sign is the high buy-back tendency of investors. On Monday and Thursday of this week, the leading index slipped significantly during trading, but gave an entry signal for bargain hunters. On the downside, the Dax must not fall below the 12,600 mark.
Bond yields soar to new heights
The ECB raised key interest rates in the euro area by 75 basis points on Thursday. The bond market is now having a major impact. The yield on a two-year federal bond, which reacts particularly sensitively to interest rate changes, at times reached a new eleven-year high of 1.429 percent. In the evening it is 1.319 percent.
The ten-year federal bond, the benchmark bond for the euro zone, climbed at times to 1.795 percent, the highest level since the beginning of 2014. In the evening it was 1.6965 percent.
According to capital market expert Thomas Altmann from the consulting firm QC Partners, the high values are particularly due to future prospects. “The not inconsiderable probability of another 75 basis point hike at the next interest rate meeting leads to a revaluation, especially for short bonds.”
Jerome Powell, head of the US Federal Reserve, is also “determined” to control inflation. He confirmed this at a conference in Washington on Thursday.
The yields on ten-year US government bonds also increased after these statements and were most recently at 3.293 percent. That’s a sharp recovery from the four-month low of 2.516 percent on Aug. 2, but still below the 11-year high of 3.498 percent hit on June 14. Two-year yields rose at times to 3.491 percent, the highest since October 2007.
“It’s important to remember the lesson we all learned years ago, which is that you shouldn’t fight the Fed,” said Oliver Pursche, senior vice president at Wealthspire Advisors in New York. “And the Fed is telling us they are focused on inflation.”
The euro is trading above par with the dollar
After the interest rate decision by the ECB, the European common currency again exceeded parity with the US dollar and is quoted at 1.0038 dollars, an increase of 0.4 percent. But for Commerzbank FX analyst You-Na Park-Heger, “an upside move in euro/dollar could prove to be a brief interlude.”
The euro could come under further downward pressure if the energy crisis in the euro zone deepens and signs of a recession increase. It is also unclear whether the ECB will be able to successfully combat high inflation given the problems in individual countries.
Gas price above the 200 euro mark again
The fall in prices on the gas market has slowed down, which should not come as a surprise given the discussions about an energy price cap. Because the freezing of prices at a low level, as decided by Great Britain, is likely to increase consumption.
Accordingly, the futures contract TTF on the energy exchange in Amsterdam for the month of October, which is trend-setting for European gas trading, already climbed above the mark of 200 euros per megawatt hour on Thursday afternoon. On Friday, the price was around six percent below the previous day’s closing at 207 euros.
Compared to the highest price on Monday of this week at 284 euros, this is a minus of 22 percent, compared to the record high of 346 euros on August 26th by more than 46 percent. On Thursday, the price of 194 euros was below the round mark of 200 euros for the first time since the beginning of August.
In contrast, investors boldly grabbed most of the other commodities. Copper and iron ore rose 2.2 percent to $7,980 a ton and 3.7 percent to 720.50 yuan ($104) a ton, respectively. Gold gained 1.2 percent to $1,728 an ounce (31.1 grams). According to stockbrokers, they all benefited above all from the devaluation of the world’s leading currency, which makes commodities more attractive for investors outside the USA. Profit-taking pushed the dollar index, which tracks the rate against major currencies, down 1 percent on Wednesday, which hit a 20-year high.
Industrial metals are also benefiting from slowing inflation in China, said portfolio manager Thomas Altmann of wealth advisor QC Partners. “This gives the Chinese central bank leeway to provide more support for the ailing economy in the Middle Kingdom.”
Look at the individual values
EnBW: EnBW’s papers went up and down after the gas import subsidiary VNG applied for state aid. Due to a lack of Russian deliveries, the company, like its competitor Uniper, has to procure natural gas elsewhere at short notice and at higher prices. Economics Minister Robert Habeck announced the prospect of timely state support for VNG in Brussels. EnBW shares were temporarily up six percent after falling by 10.3 percent in the morning. The titles went out with a plus of about one percent.
bank stocks: The Euro-Zone Banking Index extended recent gains, gaining 3.3 percent. Due to rising interest rates, the financial institutions are waving higher surpluses from the classic lending business. Commerzbank shares rose 4.1 percent and Deutsche Bank 3.3 percent.
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