The trigger was a speech by US Federal Reserve Chairman Jerome Powell, which was still echoing at the start of the week. The key message was that the US Federal Reserve sees its top priority in ensuring price stability and, in this context, reducing inflation to its target of two percent. If in doubt, it would also accept a recession for this.
Ulrich Stephan, chief investment strategist at Deutsche Bank, believes that “the Fed could be less rigorous in enforcing its tightening policy than some investors currently expect.” Already on Friday, the yield on two-year US government bonds reached an annual high of almost 3.45 percent.
“I don’t expect US Treasury yields, particularly short-dated ones, to go down anytime soon,” Stephan said. This is a burden for the stock market.
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Jochen Stanzl, analyst at the online broker CMC Markets, therefore fears that the quiet summer with an interim rally of 1500 points on the Dax could now become very uncomfortable again: “In view of the adverse news situation and concerns about a recession in Germany, investors in the Momentary any confidence and thus the willingness to get into equities on a large scale before the uncertain winter.”
This concern is reinforced by the above-average trading volume on losing days. Both last Monday and last Friday, when the Dax lost more than two percent, the trading volume in the Dax was over 65 million shares. For comparison: Last Friday, when the Dax reached its interim high of 13,948 points, only 50 million Dax titles were traded.
This underscores the prevailing selling pressure. Because in addition to the central banks and rising interest rates, the focus is also on the sharp rise in gas prices. The Russian exporter Gazprom wants to interrupt gas deliveries via the Nord Stream 1 Baltic Sea pipeline from August 31 for three days due to maintenance work. This fueled fears that the gas flow from Russia, which had already been severely restricted, could stop completely if deliveries were not resumed.
Already on Friday, the Dax broke through a psychologically important threshold with the mark of 13,000 points. Here the correction initially stopped after the interim high of over 13,900 points. Now the next stop at 12,827 points is threatening to fall. The next point of contact would be the support at 12,655 points, below which the low for the year of 12,391 points is already waiting.
Other asset classes at a glance:
Euro falls below parity to the dollar: The euro starts the new week with losses. In the morning, the common currency costs $ 0.9915. It was trading below par again, meaning it was worth less than a dollar, as it had been the week before. The euro was at a similarly low level about twenty years ago. The euro is under pressure mainly because of the appreciating dollar.
Gold falls to four-week low: The prospect of a prolonged period of high interest rates is weighing on the price of gold. The price of a troy ounce of the precious metal fell as low as $1,722 on Monday, its lowest level in four weeks. Since its interim high of $1,803 in mid-August, gold has lost more than four percent in value.
Bitcoin below $20,000: After the price of the cryptocurrency fell below the key mark over the weekend, it is initially unable to regain it on Monday either. According to data from the analysis house Coinmarketcap, it is trading at around $19,800 – in mid-August it was still at $25,000.
Oil prices increase: On Monday, oil prices extended their significant premiums from last week. In the morning, a barrel (159 liters) of North Sea Brent cost US$ 101.82. That was 83 cents more than on Friday. The price of a barrel of the US West Texas Intermediate (WTI) variety rose by $1.09 to $94.15. Oil prices have been buoyed by the prospect of lower supply for the past few days.
Look at individual values
Bayer: Investors are disappointed with the test results so far for the anticoagulant Asundexian. The shares of the pharmaceutical company fall by almost two percent. The drug missed its primary target in terms of effectiveness, commented analyst Charlie Bentley of investment bank Jefferies.
S Realty: The Austrian real estate group felt the effects of falling market prices in the first half of the year. The bottom line after the first six months of 2022 was a profit of around 62 million euros after 137 million euros in the same period last year, as the company announced on Monday. Total revenue, on the other hand, climbed to EUR 119.6 (previous year: 91.1) million. In view of the war in Ukraine and its effects, the real estate group decided not to provide an outlook for the year as a whole.
With material from dpa and Reuters.
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