Dusseldorf Apparently, investors only see risks on the global markets. In such situations, stocks are usually sold and gold and government bonds are bought in return. But that’s different at the moment.
There seems to be a “sell all” mood. According to asset manager Thomas Altmann, “everything that involves risk is sold for fear of possible further losses”. This also applies to bonds and gold.
After the unsuccessful attempt last Thursday to overcome the downward trend since the beginning of the year, the German stock market continues to fall at the beginning. At noon, the Dax was at 13,455 points, down 1.6 percent and 220 points.
According to Martin Utschneider, technical analyst at private bank Donner & Reuschel, the Dax could test the 13,400 point mark for a short time on today’s trading day, the daily low of March 11th. In his opinion, the “fundamental data from the USA that are due today will not be able to stop the downward pressure on charts and markets”.
Risks on the downside have also increased according to investor sentiment. Because in the past few trading days, many investors have bought, the investment rate has skyrocketed, and cash for further purchases is becoming scarce.
If there are new negative reports from the major burdens on the stock market such as the war in Ukraine, the corona lockdown in China or rising inflation, prices could continue to slide rapidly. Because then the new sellers would only be faced with a small number of buyers. New orientation marks on the underside would then be the psychologically important mark of 13,000 points and one floor below the low for the year in the form of 12,438 points.
In the absence of negative news, however, share prices should recover. The area around 13,500 points serves as an orientation mark for further price losses on the underside. There is also the low of the stock market month of April with 13,566 points, which was already fallen below on Monday. Sustainable prices, i.e. at the end of the day and the following day, below 13,500 points have the potential to trigger another wave of sell-offs.
Bond yields climb to new multi-year highs
For a long time, equity investors paid no attention to rising bond yields. This has changed now. Now the courses of the US tech companies, which have kept the S&P 500 up so far, are also crumbling.
Because rising interest rates are generally considered a burden for tech companies. Initially only heavily indebted growth stocks were affected, but now this trend is spreading to profitable US tech giants as well. Amazon has lost a quarter of its stock market value in the past four weeks, and Google’s parent company Alphabet has lost 14 percent.
Because bonds are reporting new multi-year highs almost every day. Last Friday, the yield on ten-year US Treasuries climbed to almost 3.1 percent, this Monday it is already 3.1806 percent, which is the highest level since 2018. The high from autumn 2018 at 3.20 percent serves as the next starting point .
Stock market expert Anton Riedl made a remarkable comparison. The inflation rate in the US reached 8.5 percent, its highest level in 40 years. “The last time inflation was this high in the United States, there was a yield of up to 16 percent on 10-year bonds,” he explains.
There is a similar sell-off mood for German Bunds. As a result, prices slide and, in turn, yields rise. At 1.16 percent, the ten-year bond also reached a new multi-year high, the highest level since 2014.
Bitcoin falls towards the low for the year
The price of gold cannot benefit from the sell-off on the stock market either and continues to fall. This Monday, the minus is 0.7 percent at a rate of 1866 dollars. In mid-April, it was just a few dollars short of breaking the $2,000 mark.
Many investors have already sold gold in the past week. For example, ETFs that have to physically deposit gold experienced one of the largest outflows in the past three months last Thursday.
With Bitcoin, too, one thing is now certain: The cryptocurrency is a risk asset and not a substitute for gold, not a safe investment haven. After shedding more than 30 percent over the past six weeks, the price is currently at $33,500, nearing its yearly low of $33,184, according to data from website Coinmarketcap. Ethereum slipped more than 10 percent and at $2421.84 is as cheap as it was two and a half ago
months.
Look at individual values
Infineon: Germany’s largest chip manufacturer has exceeded its own forecast. At the same time, the new CEO Jochen Hanebeck warns: “Global uncertainties are putting a strain on the supply chains, especially the war in Ukraine and the further course of the coronavirus pandemic.” The share fell 3.8 percent.
Adidas: A series of negative analyst comments weighed on. The shares of the sporting goods manufacturer fall by three percent to around 176 euros. The investment bank RBC Capital Markets lowered its price target to 265 from 333 euros
Asset manager Wedbush reset it to 235 euros from 282 euros, and bank Credit Suisse reduced it to 193 euros from 205 euros.
SMA Solar: The analyst firm Jefferies has downgraded SMA Solar from “Hold” to “Underperform” and lowered the target price from EUR 43 to EUR 33. This causes the share to fall by more than twelve percent. The prospects for the solar group are bleak from the point of view of the analysts. Both supply bottlenecks and the increasingly intense competition are held responsible for this.
Three stocks are trading with a dividend discount this Monday: Deutsche Post (EUR 38.98 closing price Friday, EUR 1.80 dividend), Drägerwerk (EUR 47.55, EUR 0.19) and S&T (EUR 15.91, 0, 35 euros).
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