Dusseldorf Is there a deceptive calm on the German stock market? The leading German index has been moving sideways in a range of around 200 points for two weeks. On the upper side it ends at around 15,900 points, on the lower side there is greater willingness to buy at 15,700 points.
Even on today’s trading day, the Dax remains in this range. After a weak opening session with a daily low of 15,706 points, the index closed almost unchanged at 15,800 points.
Despite the two-week sideways movement, investors are expecting market turbulence to be greater. “Everyone is waiting for the bang,” says behavioral economist Joachim Goldberg after evaluating the Frankfurt Stock Exchange survey of institutional and private investors. Apparently, a majority no longer wants to rely on the old stock exchange rule “quiet market, low risk”.
Private investors in particular are now increasingly relying on falling prices and are approaching the behavior of professionals who have been pessimistic for a long time. This is shown not only by the Frankfurt survey, but also by the Euwax indicator of the Stuttgart Stock Exchange, where primarily private investors trade. The proportion of put leverage products on the Dax has increased significantly in the past few days.
Rising pessimism, small glimmer of hope
Behind this mounting pessimism is the desire for a scenario that Goldberg outlines as follows: a rapid increase in volatility, ending with a 3-4 percent one-day drop in prices. Then quick profits would be possible by selling the short positions. At the same time, a favorable new entry opportunity would present itself.
As in the previous week, the behavioral economist expects demand at 15,350 to 15,400 points at the latest. This level should support the leading German index, giving the market a favorable starting point for further price increases.
Experienced stockbrokers know: The more investors bet on a scenario, the less likely it is that it will occur. Goldberg also doubts whether there will be a rapid slide in prices with an optimal entry scenario for private individuals and professionals. Even if this scenario were to occur, the upward trend in the leading German index would still remain intact.
There is even a small glimmer of hope on the part of the chart technique. The high buy-back tendency on yesterday’s trading day is a positive signal. Should there be follow-up purchases this Thursday, according to Martin Utschneider, technical analyst at the private bank Donner & Reuschel, there is a greater possibility that there will be an annual high. The previous one was 15,919 points. Utschneider’s short-term price target is 16,660 points, which would be a new record high.
Headwind from the USA
What is missing, however, is tailwind from the USA. There was even a headwind from Wall Street yesterday, Wednesday: the major indices fell slightly.
Because the banking crisis is by no means the only issue weighing on the US economy. The still unresolved dispute over escalating the US debt crisis is becoming an ever greater risk on the stock exchanges. This can be seen in particular from the steadily increasing premiums for credit default swaps (CDS) for US government bonds.
According to Thomas Altmann, “no one wants to believe that the world’s largest economy will default”. But the cost of hedging against a US default is skyrocketing.
“For a short term of one year, it is now more expensive to insure against default on US government bonds than on Brazilian or Colombian government bonds,” calculates Altmann.
US stock market expert Koch: “First Republic will be the new problem child”
Look at individual values
Deutsche Bank: Thanks to higher earnings, the money house started the year better than it has in a long time. “With 7.7 billion euros, we achieved the highest earnings in a quarter since 2016, the pre-tax profit of 1.9 billion euros was the best result since 2013,” emphasized CEO Christian Sewing in a message to employees. Nevertheless, the bank also announced a sharper austerity course. After a weak start of trading, the news caused the share to rise 3.3 percent.
German Stock Exchange: A takeover bid for the Danish data provider Simcorp overshadowed the stock exchange operator’s strong start to the year. The papers sag by 6.7 percent.
Aixtron: Higher costs have burdened the chip system manufacturer, the share slipped by 7.2 percent. Due to the continued strong demand and stable supply chains, the Management Board expects significant growth with increasing margins for 2023 and therefore confirmed its annual targets.
hellofresh: An increase in order value gives the company a record quarterly turnover. At the same time, the slump in profits of the recipe box mailer at the beginning of the year was less severe than feared. That’s why the share is one of the top winners in the MDax small-cap index with a plus of almost 5.4 percent
Two stocks are trading at a dividend discount today, Thursday. The RTL Group pays 3.40 euros, the closing price on Wednesday was 48.25. The construction group Hochtief pays four euros at a closing price of the previous day of 80.70 euros.
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