The Frankfurt benchmark is thus further away from its movement high of 13,792 points, which was reached on Thursday last week. Accordingly, prices above 13,800 should give a signal for the continuation of the 1400-point rally.
But how far could the Dax fall in this ongoing consolidation? So far, the leading German index has only fallen by around 2.5 percent. Four to five percent are usual in such phases, which would mean prices between 13,100 and 13,000 points.
Since there are important resistances in this area anyway, this psychologically important brand is also relevant on the underside. However, as long as this area holds, the rally that has been ongoing since July will remain intact.
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There has also been an upward trend on a weekly basis since mid-July. Accordingly, there was a new high and no further low in every trading week, which corresponds to the classic definition of such a trend.
Continuing this trend in the current trading week is ambitious. To do this, the Dax would have to rise above 13,792 points this week during the ongoing consolidation and must not fall below last week’s low of 13,388 points.
US inflation data should move markets
A preliminary decision for further market development could be made today, Wednesday. Because at 2:30 p.m. Central European Time, the US inflation rate for July will be published. The number has the potential to move financial markets globally. Investors and analysts are now expecting a decline after last month’s 9.1 percent rise. The June reading was a new 40-year high.
Should there be any indication that inflation has peaked, there is still a chance of an interest rate hike of “only” 50 basis points. If, on the other hand, inflation rises again, the US Federal Reserve would probably not be able to avoid another 75 basis point step. The clearer the direction at the forthcoming meetings of the US Federal Reserve and the ECB, the more likely there is to be a clear direction on the equity markets.
Currently, more than two-thirds of investment professionals expect a 75 basis point hike during the Sept. 21 session, according to the Chicago Futures Exchange’s Fed Watch tool. 30 percent believe in an increase of 50 basis points.
For the analysts at Landesbank Helaba, a decline in the overall rate seems possible. The declining oil prices and, above all, the low petrol prices speak for this.
US yield curve as inverted as it was last in 2000
In their view, however, core inflation – excluding food and energy prices – remains undesirably high, so that there is probably no reason for a reduction in interest rate expectations. Core inflation for June was 5.9 percent.
Is there a recession? To this question comes a resounding “yes” from the US bond market. Because the US yield curve is as inverted as it was last in 2000. The yield on two-year US bonds is 3.27 percent, while the yield on ten-year bonds is 2.76 percent.
An inverted yield curve is a well-regarded early warning indicator of a possible impending recession. At the beginning of the century this was followed by inverse curve two quarters with significantly declining economic output
Meanwhile, investors grabbed German government bonds. In return, the yield on the ten-year federal bond fell to 0.91 percent. Investors on the bond market were now firmly counting on a second interest rate hike by the European Central Bank of 0.5 percentage points in September. “The ECB will definitely try to frontload as much as possible,” said Ben Laidler, strategist at broker eToro. “I think that makes sense considering they started the race too late.” The ECB started its tightening cycle well later than the Fed, raising interest rates by 0.5 percentage point in July.
Look at the individual values
Evotec: The shares rush 11.5 percent down. According to a trader, Morgan Stanley downgraded the stocks from overweight to underweight.
Heidelberg pressure: A strong increase in earnings catapulted the shares over 16 percent upwards. In addition to the operating result, incoming orders and sales also exceeded estimates in advance, said a dealer.
eon: The energy company is not one of the beneficiaries of the energy price crisis. Although the company confirmed its forecast for the current year on Wednesday, the high prices for electricity and gas also weighed on the results of the Essen-based company in the second quarter. After initial losses, the stock is trading unchanged.
Sixt: The car rental company is benefiting from the post-Corona travel boom and the high prices for rental cars. However, this is not rewarded on the stock exchange. The stock falls 6 percent.
Here you can go to the page with the Dax course, here you can find the current tops & flops in the Dax.