Dusseldorf At the start of trading, the focus on the German stock market was no longer the hunt for a new high for the year, but rather the question: How low can the leading index fall? But after a weak start, the Dax stabilized again on Wednesday and closed 0.5 percent up at 15,631 points in the evening.
Powell’s speech drastically changed the expectations of professionals. According to the Chicago futures exchange’s Fed Watch tool, only one in three had previously expected a 50 basis point rate hike during the March 22 session, compared to two-thirds.
The maximum interest rate is moving towards six percent. Almost one in three expects this level – however, there is still a majority that forecasts 5.75 percent at the end of 2023.
For the capital market expert Thomas Altmann, bonds are becoming an ever greater competitor for stocks. “If sub-investment-grade US corporate bonds are yielding around 6% for some maturities, then they may be a more attractive asset class for those who don’t want to invest for the long term or who have weaker nerves,” said the senior portfolio manager Investment house QC Partners.
Dax uptrend remains intact
The upward trend of the Dax since the beginning of the year remains intact overall. After evaluating several technical indicators, Martin Utschneider, technical analyst at private bank Donner & Reschel, is also certain: “The sideways mode at a very high level is continuing.”
Because the leading index has almost fallen back into the old days, in the sideways movement since the beginning of February, which is around 15,200 points on the underside. In the past five weeks, the daily closing price fell just a few points below this mark and, in retrospect, formed the starting point for a new high for the year. Therefore, this area offers itself as a stop-loss mark.
Heading in that direction, however, short-term investors should note the upside gap that opened last Friday. Such gaps arise when the lowest price of a trading day is above the highest price of the previous day.
Specifically: On Thursday last week, the highest price was 15,329 points, on Friday the Dax was not listed below 15,410 points. Such gaps are effectively a re-evaluation of the market because there has been no trading in that range.
>> Read also: These four Dax top performers offer further price opportunities
The sideways range may have increased from the original 400 points to more than 550 points due to the failed attempt on the upper side. This suggests that the movements in the Dax are likely to increase in the coming trading days. That would not be a surprise as the 400 point range in February was very narrow.
Labor market data in focus
According to a survey, US companies created more than twice as many jobs in February as in the previous month. The bottom line was that 242,000 jobs were created, as the personnel service provider ADP announced on Wednesday in its company survey. Experts polled by Reuters news agency had only expected an increase in the private sector of 200,000, after a revised 119,000 in January. At 7.2 percent, wages increased significantly compared to the same month last year, albeit somewhat more slowly than before.
“We’re seeing robust hiring, which is good for the economy and for workers, but wage growth remains quite strong,” said ADP chief economist Nela Richardson. “The modest slowdown in wage growth alone is unlikely to push inflation down anytime soon.” Many experts fear that companies will pass higher labor costs on to their selling prices, thereby keeping inflation high for longer.
On Friday, the US government releases its jobs report, which also includes public sector jobs. Economists expect jobs to rise by 203,000 in February after 517,000 in January. According to the US Federal Reserve, which continues to hike interest rates to fight inflation, the demand for labor in the US far outstrips the supply of available labor. From the Fed’s point of view, it would be desirable for the labor market, which has been overheated, to cool down so that the disturbed balance can be restored.
Look at the individual values
burning day: Despite the inflation, the chemical trader managed to make a leap in growth last year and wants its shareholders to participate in this with a higher dividend. In addition, CEO Christian Kohlpaintner announced a share buyback, which the Bloomberg agency had previously forecast.
Brenntag shareholders are to receive a dividend increased by 55 cents to two euros per share. In the course of the planned share buyback, which is scheduled to start in March, around 10.5 million shares with a volume of up to EUR 750 million are to be acquired. That would be 6.8 percent of the share capital. The stock lost around one percent on Wednesday.
>> Read also: Brenntag ensnares investors with share buybacks and higher dividends
Continental: The auto parts supplier has surprisingly increased operating profit despite massive cost increases. Continental wants to reduce the dividend by 70 cents to 1.50 euros per share because net profit has collapsed due to various special effects. The share rose by more than seven percent, making it the biggest daily winner in the Dax.
Symrise: The investors in the fragrance and flavor manufacturer Symrise had to digest the business figures and cartel investigations presented because of possible agreements against Symrise and other companies. The papers increase by 0.6 percent.
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