The 14,000 point level has become a key resistance.
(Photo: Bloomberg Creative/Getty Images [M])
Frankfurt The German stock market started the new trading week with price gains. The Dax rose on Monday by 1.4 percent to 14,175 points. In the morning, the leading index even stood at 14,217 points before falling slightly as a result.
Now the Frankfurt stock exchange barometer has to confirm the latest gains. Recently, profit-taking had quickly set in after positive trading days.
“The German stock index is currently comparable to an airplane that has too much luggage on board,” said Jochen Stanzl from CMC Markets. “There are always attempts to withdraw, but then they fail.” The baggage that investors are carrying ranges from supply shortages and high inflation to a monetary policy turnaround and the fear that all of this could ultimately trigger a recession.
New figures for the Ifo index on the business climate in Germany provided a positive surprise. The barometer rose from 91.9 points in the previous month to 93.0 points and thus for the second time in a row, as the Munich Ifo Institute announced on Monday in its survey of around 9,000 top managers.
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“The German economy is proving to be robust despite inflation concerns, material shortages and the war in Ukraine,” said Ifo President Clemens Fuest. “There are currently no signs of a recession.” Executives were less skeptical about their business situation and prospects than they were recently.
The Russian invasion of Ukraine is causing rising raw material prices, more supply bottlenecks and increasing uncertainty among companies and consumers. The supply chain problems in China and the prospect of sharply rising interest rates are also affecting the economy. Concerns about a recession have therefore recently increased.
Statements by ECB President Christine Lagarde on the turnaround in interest rates also caused a stir. In a blog post, she announced the end of negative interest rates in the euro area in September.
This caused a jump in prices, especially for bank shares. With an increase of seven percent, Deutsche Bank was far ahead of the Dax leader. The same applied to the Commerzbank share, which gained 6.5 percent in the MDax. The European industry index rose by 2.4 percent.
Financial institutions are currently suffering particularly from the negative interest rates. The deposit interest rate, which is decisive for monetary policy, is currently minus 0.5 percent. This means that banks have to pay fees for excess liquidity that they hold with the central bank. Should that change, it could have a positive impact on banks’ results.
Euro at its highest level in four weeks
The course of the euro also increased after Lagarde’s statements. The shared currency peaked 1 percent higher to a four-week high of $1.0668. The common currency was still quoted at this level in the evening. On the financial markets, an interest rate hike by the ECB is generally expected for July.
Individual values in focus
German Euroshop: Major shareholder Alexander Otto wants to completely incorporate the shopping center investor Deutsche Euroshop and is teaming up with the US financial investor Oaktree Capital. A total of 1.4 billion euros would be offered, said the bidding consortium Hercules BidCo on Monday, which is controlled by Oaktree and Otto’s asset management company Cura. Shares in Deutsche Euroshop held up their high gains over the course of the day, closing 40 percent higher at EUR 21.90.
Siemens Gamesa: At the weekend, Siemens Energy announced that it wanted to take over the wind power subsidiary Siemens Gamesa completely. The Munich-based company wants to offer 18.05 euros per share in cash for the remaining shares. The shares of the Spanish subsidiary gained 6.2 percent in Madrid.
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