Dusseldorf On the German stock market, investors retreat again at the end of the week. The Dax is 0.6 percent lower on Friday afternoon at 13,613 points. On Thursday, the leading index rose by 0.5 percent to almost 13,700 points.
Before the weekend, interest rate worries are back in focus. On the one hand, producer prices in Germany rose more than ever in July by 37.2 percent, as reported by the Federal Statistical Office on Friday. They are an important leading indicator for the further development of inflation in a currency area.
On the other hand, James Bullard, President of the regional Fed St. Louis, spoke out in favor of a further interest rate hike of 75 basis points at the next US Federal Reserve meeting in November. It would be the third step of this magnitude in a row.
For classification, however, one has to say that Bullard is one of the best-known supporters of a restrictive monetary policy. In this respect, this demand is not surprising, after all, expectations of the Fed fluctuate between an increase of 50 or even 75 basis points.
Top jobs of the day
Find the best jobs now and
be notified by email.
Equity investors’ interest rate concerns continue to benefit the dollar. The dollar index, which compares the rate of the world’s leading currency to others, continued its upward trend and rose to its highest level in four weeks. Cyclical stocks, on the other hand, are quoted at discounts. In the Dax, Deutsche Bank, Mercedes Benz, Porsche and BMW lose between two and three percent.
Overall, market players are currently not willing to take risks. This is reflected in the still very low retail sales. In the current trading week, an average of less than 50 million shares were traded per day. This value is well below average.
However, assets that are considered safe cannot benefit from the strong risk aversion on the market. Investors also refrain from buying gold or German government bonds. They simply keep their feet completely still.
This can still lead to larger price fluctuations. In phases with little activity, only a few players are enough to move prices more.
Trading volume is higher on Friday. Although there are hardly any dates relevant to the stock exchange, the expiration day on the stock exchanges is small. On such days, options on indices and individual stocks expire at lunchtime and are then settled. Pros in the futures markets typically seek to move the prices of the products they own in a direction that is favorable to them.
Turkish lira: the next devaluation?
The Turkish lira is once again in the spotlight. The currency once again fell to a record low against the US dollar on Thursday. One dollar cost up to 18.1385 lira. Also on Friday the Turkish currency is just above this level.
Since the beginning of the year, it has lost more than 35 percent and has now fallen below the psychologically important mark of 18 lira per dollar for the first time, which it had been heading for in recent weeks. Turkey is dogged by extremely high inflation. Most recently, the inflation rate was almost 80 percent.
But the central bank reacts to this – mainly due to the influence of President Recep Tayyip Erdogan – with interest rate cuts instead of increases. This was also the case on Thursday, when, contrary to general expectations, it reduced the key interest rate to 13 percentage points.
This not only contradicts every macroeconomic theory, but also drives up inflation. Finally, a weak currency means that importing goods from abroad becomes relatively expensive.
In this respect, the analysts at Commerzbank expect that the next surge in inflation is already imminent – “as long as there is no appropriate fight against inflation and a corresponding monetary policy framework”. Inflation expectations had “got completely out of hand”.
The experts only see the central bank in a subordinate role. After all, it makes little difference whether the interest rate is 14 or 13 percent as long as monetary policy cannot be shaped independently.
But the Turkish state has taken a number of unconventional and expensive measures to counter the currency collapse. For example, the government introduced an exchange rate hedging interest rate. Anyone who saves assets in lira receives such a high interest rate that it secures the exchange rate in dollars. In this way, politicians want to prevent citizens from exchanging even more lira assets for dollars. But the rapid deterioration proves that none of the measures had any effect.
Bitcoin and Ether collapse
The most important cryptocurrencies also lost significantly in value on Friday. The most valuable cryptocurrency Bitcoin falls by nine percent to $ 21,363. The cyber currency was last at this level at the end of July.
Here, too, the interest rate fantasies on the markets are the cause. Bitcoin and other digital currencies have a hard time as an interest-free investment in a market environment of rising interest rates. As a result, the crypto market is under pressure.
Over the weekend, Bitcoin climbed above the psychologically important $25,000 mark for the first time since June. But investors’ inclination towards riskier assets was apparently short-lived. As a result, things went downhill slowly and dynamically at first.
The recent low trading volume during the current holiday period could also have favored the downturn, says Timo Emden from the analysis company of the same name. “The conditions for further sales are obviously ideal at the moment.” According to Emden, the digital currencies “remain the target of speculative addresses that have counted on a rapid fall in prices”.
The second most important currency, ether, also lost up to nine percent to $1,700 on Friday. Losses are even greater for back-tier currencies such as Ripple, Cardano, and Solana. The total market cap of the crypto market is down 8.5 percent on a 24-hour basis, according to data from Coinmarketcap.
Individual values in focus
Just Eat Takeaway.com: The sale of the iFood shares to the technology investor Prosus for 1.8 billion euros ensures a massive price jump. The shares of Europe’s largest food supplier rise in Amsterdam by up to 35 percent to 22.40 euros.
Adyen: According to the payment service provider’s latest results, Credit Suisse has raised its target price from EUR 1,750 to EUR 1,950 and confirmed its rating of “Outperform”. Investors are making profits on Friday. The share is 3.6 percent lower in Amsterdam at 1676 euros.
Hypoport: Metzler has downgraded the financial intermediary’s shares to “Sell” from “Hold”. This pushes the papers to the bottom of the SDax with a minus of 13 percent.
Borussia Dortmund: The Bundesliga club made a loss of 35.1 million euros in the past financial year after minus 72.8 million before. Sales increased from 334 to 351.6 million euros, the operating result to 80.8 million euros (39). Due to the pandemic, the club lacked important viewer income. In the new financial year, however, BVB wants to be in the black again. The stock is up 0.6 percent.
Here you can go to the page with the Dax course, here you can find the current tops & flops in the Dax.