The leading German index has already reached several new record highs this year.
(Photo: Bloomberg Creative / Getty Images [M])
Dusseldorf Investors in the German stock market remain confident. On Tuesday, the Dax rose above 16,100 points for the first time in its history. The new record now stands at 16,104 points. With the opening of US trading, the Dax surrendered its daily gains and closed almost unchanged at 16,040 points at the end of trading.
In any case, it is noticeable that investors are increasingly holding back. The leading index achieved its new record with a low volume. Around 60 million pieces were traded, after 49 million the previous day. These values are far below the level of the past few weeks.
Thomas Altmann from asset manager QC Partners sees this as a potential indicator of a lower willingness to buy. “It looks like the air is slowly escaping,” explains Altmann. The Helaba experts also see possible indications of a decline in confidence. You are questioning how much potential is actually left on the upside.
However, these conclusions cannot yet be drawn from the latest evaluation of the Dax sentiment. Investors are acting euphorically, and the state of the market is also positive. That can change quickly, however: euphoria is a contra-indicator in sentiment theory.
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What speaks for the Dax: It has now closed four days in a row above the mark of 16,000 points – a significant difference to the previous jumps above this level, when the leading index slipped again very quickly. Investors have apparently come to terms with the new spheres better.
From a technical point of view, the situation has hardly changed. The analysts of Société Générale continue to recognize a “stalemate between bulls and bears in the orbit of the old record high”, which is 16,030 points and was reached in August. The first point of contact is therefore 16,200 points.
The chart technicians at HSBC Germany define 1200 points as medium-term price potential. This emerges when looking at the trend over several months: Since the beginning of April, the Dax has been between 14,800 and 16,000 points. According to the chart technique, this trading range, i.e. 1200 meters, is a measure of possible price gains.
Meanwhile, the economic expectations of the stock exchange traders are surprisingly good. The barometer compiled by ZEW rose by 9.4 points to 31.7 points compared to the previous month. The indicator had previously fallen five times in a row. On average, a decline was also expected this time.
The turning point in the markets
Exactly one year ago, on November 9, 2020, the big breakthrough in the fight against the pandemic came. The Mainz-based company Biontech and its US partner Pfizer announced on that day that they wanted to submit the approval application for their jointly developed vaccine against the corona virus in the USA.
Investors reacted enthusiastically, the Dax shot up by six (!) Percent and ultimately closed five percent higher than 13,000 points. In addition to pharmaceuticals and health stocks, cyclical stocks also profited to a large extent.
November 9th of last year therefore still marks the decisive turning point. Since then, things have continued to improve, with only minor setbacks. There was no correction, i.e. a decline of at least ten percent – that is unusual for such a long period of time.
Despite the current record number of cases, it is clear that the consequences of the corona pandemic are now less relevant for investors than they were a year ago. The number of cases has hardly any influence on the overall market.
In the case of individual values, however, large to very large swings can still be observed. This is shown, for example, by the massive price losses in shares from the pharmaceutical and medical technology sectors as a result of the announcement at the end of last week on the stock exchange that Pfizer has presented very strong test results for a new type of Covid drug. In the Dax, for example, Merck and Sartorius lost more than five percent.
What a look at the corona winners reveals
One year after the turning point, it is worth taking a look at the stocks that have benefited in particular from the pandemic situation and the associated lockdown due to their business model. The answer to this gives a differentiated picture.
The share of the Dax-listed food delivery service Delivery Hero is slightly above the level twelve months ago. At Shop Apotheke, the plus is even greater. Nevertheless, both papers performed significantly worse than the comparative indices Dax and MDax, which each rose by 25 percent during this period.
The bottom line: From a twelve-month perspective, it would not have been a good idea to rely on the two corona winner papers. An index certificate would have been the better alternative.
Looking back, you can also see when the hype surrounding these stocks ended. In February of this year, both stocks reached their record highs, after which the Delivery Hero share fell by around 25 percent, and that of the Shop Apotheke even almost 40 percent.
The big exception is the share of the cook box mail order company Hellofresh, also a corona winner. The paper has more than doubled over a twelve-month period. The newcomer to the extended Dax increased its sales forecast again at the beginning of the month and has also been profitable since 2020.
Gold is holding at a two-month high
The price of the precious metal is at its highest level since the beginning of September. On Tuesday an ounce of gold costs $ 1,828 in the evening. For comparison: a week ago the gold price was still at $ 1,770.
The gold price is currently supported by developments on the bond market. The yield on ten-year US government bonds is currently below 1.5 percent, after 1.7 percent in the middle of last month. Lower bond yields make gold more attractive as an investment alternative.
In addition, the demand for physical gold is picking up again. This is due, among other things, to two public holidays in India, emphasizes analyst Daniel Briesemann from Commerzbank. Demand from China has also increased again, as data from the World Gold Council show.
The situation is also stable from a technical chart point of view. According to Martin Utschneider from the private bank Donner & Reuschel, the level of 2000 dollars remains the medium-term goal. But there could still be a long way to go until then: various chart-technical resistances lie between 1,800 and 1,900 dollars.
Focus on individual values
Bayer: The share of the pharmaceutical and agrochemical group is one of the favorites with a plus of 1.5 percent on Tuesday. Bayer significantly increased its earnings in the third quarter and exceeded forecasts.
Munich Re: The reinsurer sees itself on course despite billions in hurricane and flood losses. The board of directors sees the planned annual profit of 2.8 billion euros within reach despite the damage. Investors don’t seem convinced, however. The paper loses 2.5 percent by the close of trading.
Fresenius: The titles of the health company lose around four percent to 37.77 euros and are cheaper than they have been for almost seven months. The US bank JP Morgan downgraded Fresenius to “neutral” from “overweight” and lowered the price target to EUR 42.30 (52.40).
FMC: For the dialysis subsidiary Fresenius Medical Care, it is down by 3.6 percent. The analysts now also see the target price for FMC lower at EUR 48.70 after EUR 60.80 previously.
Deutsche Bank: Deutsche Bank has received better credit ratings from the US rating agency Standard & Poor’s. The long-term issuer rating and the rating for senior preferred bonds have each been raised to “A-” from previously “BBB +”, the financial institution announced. That didn’t help the stock, it fell 1.8 percent.
Fraport: The airport operator is benefiting from the return of the desire to travel after the corona restrictions. The board was more confident for 2021. He now expects traffic development in Frankfurt at the upper end of the range of under 20 to 25 million passengers. The shares in the MDax temporarily gain more than four percent before profit-taking begins. At the end of trading, the share was 0.6 percent up.
What the chart technique says:
The increase in the previous week has torn two upward price gaps that still serve as support for the Dax. One gap is between 15,760 and 15,690 points, another between 15,998 and 15,973 points.
These upward price gaps occur when the lowest point of the trading day is above the highest point of the previous day. As a result, there has been no trading in this area. From a technical point of view, such a development is considered a sign of strength.
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