In the meantime, the Dax has given back more than half of the price gains of the summer rally, which lifted it from 12,390 to 13,947 points from the beginning of July to mid-August. With today’s daily low of 13,085 points, the downward movement has expanded since last Tuesday.
Inflation, recession and rising interest rates – this cocktail of fears is currently causing unrest on the stock exchange. It is interesting to note that government bond yields develop inversely to share prices.
The values for a ten-year federal bond and for a US government bond of the same term are at 1.3 percent and 3.03 percent at the level of July 21 – just like the Dax. The interim drop in yields to 0.7 percent and 2.6 percent made the summer rally on the stock exchanges possible. Ergo, the further development of the stock market in the coming days and weeks will depend heavily on the yields on the bond market.
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Another relevant chart for the stock market is the gas price, which is establishing itself at high levels. After falling to 260 euros for the September contract at the close of trading on Tuesday, the price rose again to 283 euros in early trading today, an increase of around five percent.
This is the TTF futures contract for Dutch natural gas. It is regarded as pointing the way for the European natural gas market.
In the past week, natural gas was traded at a peak of just under 251 euros. Only in the period immediately after the outbreak of war in Ukraine was the price of natural gas traded in Europe briefly higher, peaking at over EUR 300 in early March.
Dax is technically battered
Technically, the German stock market barometer is battered after the losses in the past few days. According to Martin Utschneider, technical analyst at private bank Donner & Reuschel, if the 13,000 point mark is broken, the short-term target price will be 12,655 points.
Just below that are probably the last marks that could prevent another crash from a technical point of view: on the one hand, the multi-month low from April with 12,438 points and on the other hand the low for the year with 12,390 points. On the upside, only values above 13,500 would take the greatest pressure off the German standard values.
Lira remains near record low
The extent to which market participants adjust to a recurring pattern can currently be explained using the Turkish lira. President Recep Tayyip Erdogan has again rejected interest rate hikes in Turkey. Nevertheless, the lira rate does not fall further. The currency remains at 18.14 lira to the dollar, near a record high of 18.36 lira.
It used to be different. After such announcements, the Turkish currency slipped significantly. Now, according to Commerzbank FX analyst Tatha Ghose, it’s “an all-too-familiar pattern that doesn’t even contain a covert element of surprise.”
In the past, market participants always assumed that Erdogan would abandon the view of falling interest rates when faced with the reality of high inflation and a depreciating lira.
For Erdogan, however, fast investments and thus a strengthening of the supply side are the right way to combat inflation.
“But the sticking point is that Turkey needs a lot of foreign capital to close the gap between the required investment rate and Turkey’s low savings rate,” says Ghose. However, in the absence of a sensible policy framework, this foreign capital will increasingly hesitate – even if this only becomes apparent in the longer term.
The euro remains below par with the dollar
The euro, the shared currency, also remains under pressure since it slipped to a 20-year low below $0.990. The new low has shown that downside risks are dominant, especially as an interim attempt at recovery via parity failed, summarized the analysts at Hessisch-Thüringische Landesbank (Helaba). The euro is currently down 0.3 percent at $0.9940.
In view of “the looming energy crisis and the associated risk of recession, the price should remain below par for quite a while,” said Jürgen Molnar, capital market strategist at RoboMarkets. “But there is always the possibility that the euro will fall even more sharply against the dollar.”
Look at the individual values
hellofresh: The share fell 4.1 percent to around EUR 26.20. Although Deutsche Bank has maintained its buy recommendation for the paper, it has lowered its target price from EUR 70 to EUR 54. That would still be double the current listing.
CTS Eventim: The company was able to convince with its quarterly figures. The return of concert operations after the compulsory Corona break makes the tills ring at the ticket broker. The shares gained 1.9 percent in a weak market environment.
Hugo Boss: A gloomy outlook from the US brand fashion retailer Nordstrom pulls the paper down. Boss shares fall 0.8 percent. Nordstrom shares fell 13 percent in after-hours trading. Like US department store chain Macy’s, Nordstrom is feeling the effects of declining consumer purchasing power and has to cut prices to reduce its high inventories.
Here you can go to the page with the Dax course, here you can find the current tops & flops in the Dax.