Dusseldorf Everything on the German stock market is now revolving around a new record high. Will the Dax already set a new record this trading week, i.e. prices above 16,290 meters?
The prerequisites for this are good. With a daily high of 16,202 points, the Dax was at times less than 90 points away from the record mark on Tuesday. At the close of trading, the leading index was 0.8 percent higher at 16,152 points.
From a technical point of view, there is no major resistance on the way to the record high. Short-term investors can use the upward price gap that was torn on yesterday’s trading day as a hedge. This is a sign of strength.
Such gaps arise when there was no quotation in one area on two consecutive trading days. In the specific case, the highest point at the end of the year was 15,890 points, the daily low at the beginning of the year marked 15,943 digits. The gap would be closed at a price of 15,890 points. Below this, the 200-day line, which is important for long-term investors and currently has 15,544 meters, acts as further support.
Bold optimists naturally hope that a completely different stock market wisdom will come true: As is the case for the first five days, for the entire trading year, this is the rule. But investors shouldn’t rely on that, even if this wisdom was confirmed last year.
Today’s price rise is supported by good data from China. In the Middle Kingdom, the Caixin purchasing managers’ index climbed from 49.9 to 50.9 points in December compared to the previous month, the highest level since June of last year. Values over 50 indicate economic growth.
According to Thomas Altmann from the investment house QC Partners, China is not experiencing a boom at the moment. “But China is just as far away from a catastrophe in the sense of an economic slump,” says the capital market expert.
With a new record high this trading week, the Dax chart would take almost exactly the same course as at the turn of the year 2020/21. Back then, too, the leading index slipped in mid-December due to the large expiry date on the futures markets, but then set a new high on January 8, 2021.
In addition, the price gains since the beginning of the year are a confirmation of the so-called January effect. Last December, investors sold underperforming stocks to offset losses with gains for tax reasons; in January they reinvest this capital that has become free.
Investors should only deal with the fact that price gains in the first weeks of January are usually followed by a setback at the end of the month.
Is there a turnaround in interest rates on the bond market?
An important brand is also in focus on the bond market: ten-year Bunds are once again targeting zero. On December 21 of last year, the value for a ten-year federal bond was minus 0.360 percent. Today, Tuesday, a value of minus 0.117 percent was achieved, currently it is minus 0.133 percent. The exciting question: Will there be a sustainable turnaround towards positive interest rates this year?
Apparently, the majority of investors are expecting an initial rate hike this year – in contrast to the public statements made by the ECB. So investors sell bonds, prices fall accordingly and yields rise. Which leads to the question: What happens if the central bankers rule out a rate hike again? Capital market expert Thomas Altmann then believes a quick turnaround in the bond market is possible.
The explanation: The rise in yields was not, as is usually the case, caused by a boost in inflation expectations. This is why the analysts at Landesbank Helaba write in their morning commentary this morning: “Obviously, the players are relying on a sustained economic recovery and a slow but sustainable turnaround in monetary policy.” This is supported by the fact that the yield difference between the Bund and has not significantly changed the government bonds of southern European countries.
“The next few days will have to show whether the majority of investors actually come to similar assessments as those who contributed to a sell-off of European government bonds in the thin holiday trade,” write the Helaba analysts.
According to a technical chart analysis, the so-called bottoming out of the ten-year Bund was heralded in May 2019. Should the return rise above the previous highs of minus 0.17 percent and 0.06 percent in this period, this process would be completed. In the opinion of Jörg Scherer, technical analyst at HSBC Germany, the return should then increase in the range between 0.15 and 0.19 percent. “The imputed minimum price target from the lower reversal can even be estimated at around 0.60 percent,” Scherer calculates.
Look at individual values
Today’s trading day focused primarily on the stocks of vaccine manufacturers, all of which are clearly falling and have thus strengthened their tendency since the beginning of December. The slide is greatest for Valneva shares, which have fallen by more than 23 percent by the evening. Reason for the crash: The Omicron variant of the coronavirus, which is more contagious but arguably less deadly than its predecessor, could lead to herd immunity and thus make the Valneva vaccine superfluous before it even hits the market.
Valneva’s vaccine is based on what is known as a dead vaccine, an older technology than the currently available messenger RNA and vector vaccines. The Valneva vaccine was mainly intended to reach those population groups who believe in traditional manufacturing processes.
In the course of the expectations that the pandemic will largely end in 2022, the paper of the German vaccine manufacturer Biontech is down 3.7 percent on the German stock market. The share price of the US vaccine manufacturer Moderna also fell 3.7 percent on the German trading platform Xetra.
Since the beginning of December last year, the prices of these vaccine manufacturers have fallen by more than 30 percent. A clear indication that the market expects the pandemic to end soon due to the Omikron variant.
The effects of rising interest rates can also be seen on the German stock market. The industry rotation away from technology towards cyclical industrials continues. After all, these cyclicals in particular benefit from an economic recovery, while the riskier growth stocks are then less attractive.
The Daimler share leads the DAX winners list on Tuesday with an increase of almost five percent. Porsche titles increase by 3.7 percent, VW shares by 3.4 percent.
The mining company K + S is one of the biggest winners in the MDax small cap index, with the share rising by almost four percent by the end of trading. In addition: Aviation values remain in demand as on the previous day. Lufthansa shares rose by 4.8 percent and Fraport shares by 3.3 percent. It is also hoped that Omikron will not affect international travel too much.
On the losing side are the values of the food delivery service Delivery Hero (minus 6.4 percent), the cooker box mail order company Hellofresh (minus 8.9 percent) and the online fashion retailer Zalando with a loss of 4.2 percent.
BASF: The Ludwigshafen-based chemical company wants to return three billion euros to the shareholders through a share buyback. The announcement is rewarded on the stock market with a plus of more than four percent. The buyback campaign is scheduled to start in January and run until the end of 2023. At the share price on Tuesday, the volume corresponds to a good five percent of the share capital. The dividend should not suffer from the share buyback. The group last bought back its own shares between 1999 and 2008.
Grenke: The Grenke share increased by 0.3 percent. The leasing company’s new business was reportedly at $ 1.7 billion in 2021 at the upper end of the company’s targets. However, these had previously been reduced, said a stockbroker.
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