Dusseldorf On the big day of expiry on the futures markets, prices on the German stock market moved comparatively little: after the Dax had started trading with a small plus and was even 1.3 percent higher at midday, it gave up its gains after the US opened Stock markets mostly down, but stayed above the 13,000 point mark. At the end of trading, the Dax was still 0.7 percent higher at 13,126 points. The US stock exchanges have been trading firmer since the start of trading.
On Thursday, the Frankfurt stock exchange barometer recorded its biggest daily loss in more than three months. It fell 3.3 percent to 13,036 points due to renewed fears of a recession triggered by interest rate hikes in the USA, Switzerland and Great Britain. Since the interim high on Whit Monday, the loss for the Dax has totaled more than ten percent.
The Witches’ Sabbath, also known as the “big day of expiry”, is actually considered a volatile trading day. On the third Friday in March, June, September and December, many futures transactions expire at once on the stock exchanges worldwide.
Options and futures on indices and individual stocks expire. This can lead to greater price fluctuations as the issuers of the derivatives prepare for options and futures to be redeemed or expire. To do this, they buy or sell stocks and indices to which the derivatives relate.
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According to Jochen Stanzl, chief market analyst at CMC Markets, the final sell-off is still pending. “Although the prices have fallen sharply and the volume has also increased, they are not noticeably strong,” says the strategist. After the course recovery on Friday, it is therefore not yet possible to speak of a bottom.
According to Dekabank, in addition to inflation and rising interest rates, cuts in gas supplies from Russia are also playing an increasing role on the markets. “Concerns about gas rationing in autumn and winter and thus the likelihood of a recession are increasing,” says the institute.
On Friday on Dutch radio station BNR, ECB Council member Klaas Knot announced the prospect of further major interest rate hikes should core inflation continue to rise. This excludes the volatile energy and food prices. “If it continues to rise, we will further intensify and there will be several rate hikes of 50 basis points,” said the Dutch central bank governor.
Core inflation in the euro area climbed to 4.4 percent in May, and the general inflation rate to 8.1 percent. This means that inflation is now four times higher than the ECB’s target of two percent. Like many other central banks, it considers this mark to be optimal for the economy.
Yields on ten-year Bunds fall
Investors grabbed European government bonds again. As a result, the yield on the ten-year federal bond fell to 1.662 percent. Their Italian counterparts were even more in demand, so that the much-noticed yield difference (spread) between these securities fell to its lowest level in almost two weeks.
Stock market traders reacted with relief to statements by ECB boss Christine Lagarde on the planned limitation of spreads. Reuters news agency, citing insiders, reported that behind closed doors it explained the recently announced so-called “anti-fragmentation tool” to euro-zone finance ministers. However, Lagarde left it open as to the yield gap from which this tool should be used.
Meanwhile, according to strategists, fears are growing that interest rate hikes by central banks could trigger a global recession. Persistent concerns about the economy caused oil prices to fall sharply. The North Sea variety Brent lost 4.7 percent to $ 114.30 per barrel, US light oil WTI fell by 5.4 percent to $ 111.24 per barrel. On a weekly basis, Brent is heading for its first loss in five weeks.
Yen still under pressure
The euro briefly rose above the $1.05 mark again: the common currency cost $1.0505 in the afternoon, but then fell back to $1.0468. The ECB had set the reference rate at exactly $1.04 the day before.
The yen, on the other hand, continued to depreciate after the Japanese central bank announced that it would continue to pursue its ultra-loose monetary policy despite high inflation. In the evening, 134.9800 yen had to be paid for one US dollar. The Japanese currency was only slightly above its 24-year low.
>>> Read also: Yen falls to 24-year low – experts warn of further fall
After the two-day meeting, the Bank of Japan (BoJ) decided to leave its main monetary policy levers unchanged. Short-term interest rates are to remain at minus 0.1 percent and long-term rates at around zero. The BoJ is also sticking to its purchases of government bonds and shares.
Nevertheless, the Japanese Nikkei index in Tokyo fell by 1.5 percent to 26,027 points on Friday. According to the analysts at DBS Bank, the decisive factor on this trading day was renewed fears of a recession as a result of the largest interest rate hike since 1994 in the USA.
Look at the individual values
Delivery Hero: The shares of the Dax company rose by 10.7 percent and made up for part of the approximately ten percent loss on Thursday. Delivery Hero thus led the Dax.
eon: Among the favorites in the Dax, the shares of the utility Eon, which were very weak the day before, stabilized at plus 3.3 percent. An upgrade from “neutral” to “buy” by Goldman Sachs was helpful.
ABN Ambro: After a media report on a possible takeover, ABN Amro shares temporarily rose by more than 17 percent to EUR 12.16. Bloomberg reported that French bank BNP Paribas is interested in the largely state-owned Dutch institution. The French recently felt the matter with the Dutch government, but this has not yet led to concrete negotiations. ABN Amro said it would not comment on rumours. BNP declined to comment. The papers of the French bank were around one percent higher at 47.85 euros. Deutsche Bank also benefited: the paper was up 0.6 percent.
real estate company: Real estate values, which have recently been particularly weak due to the turnaround in interest rates, have been firm. Vonovia was one of the winners in the Dax with an increase of around 3.4 percent. Aroundtown, Deutsche Wohnen and Grand City Properties were among the winners in the MDax, each with a plus of up to 8.5 percent. Grand City Properties was buoyed by a buy rating from Societe Generale. Just the day before, Grand City had hit its lowest level since early 2015.
Addex: The discontinuation of tests for a drug against Parkinson’s led to the second largest share price drop at Addex in the company’s history. The shares of the Swiss pharmaceutical company fell by more than 53 percent in Zurich at times. The agent was a beacon of hope, comments analyst Leonildo Delgado from Baader Helvea Bank. He therefore downgraded the title to “Sell” from “Add” and reduced the price target to CHF 0.25 from CHF 0.84.
XSray: Advances in US approval of a leukemia drug gave XSpray its biggest share price jump in nearly a year. The shares of the pharmaceutical company temporarily rose by a good 14 percent in Stockholm. The US health authority FDA granted the drug orphan drug status, which lowers the hurdles for approval.
Here you can go to the page with the Dax course, here you can find the current tops & flops in the Dax.