Dusseldorf After the price recovery of the past few days, fear of interest rates had the stock markets firmly under control again in the middle of the week. After a friendly start, the Dax quickly slipped into the red and then expanded its losses. At the end of trading, the leading German index was 2.04 percent lower at 13,626.71 points. The MDax for medium-sized companies fell 2.01 percent to 27,543.16 points on Wednesday.
A large proportion of investors had recently held back noticeably. This is reflected, for example, in the persistently low trading volume. In the middle of the week, the pessimists then dominated given the renewed inflation concerns after the publication of the new price data from Great Britain. Inflation there was 10.1 percent in July, according to the statistics office.
The most important date on Wednesday is not until the evening. Then the US Federal Reserve will publish the minutes of its most recent interest rate meeting at the end of July. Investors are hoping for clues as to the speed and scope at which monetary authorities intend to raise interest rates further. “The hope of the market participants is that the US Federal Reserve will be a little lenient with regard to future interest rate hikes,” said analyst Christian Henke from brokerage house IG.
In July, the Fed raised interest rates again by three-quarters of a percentage point. It is now in a range of 2.25 to 2.5 percent. Further rate hikes are likely given the very high inflation in the country. Recently, the price pressure in the USA has weakened slightly. Consumer prices rose by 8.5 percent in July, after 9.1 percent in the previous month. However, observers warn against too much optimism.
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Investors still get stability from the general market picture. Because the Dax is currently in an intact upward trend. Since mid-July, the highs of a trading week have always been above the highs of the previous week, while the lows of the week have always been higher than the lows of the week before.
In the middle of the week, some indicators suggest that this development will continue. The Dax has already exceeded the highest listing of the previous week. Now it must not fall below 13,455 points for the rest of the week, the lowest level of the past trading week.
Investors on the German market seem to follow the well-known stock market proverb “The trend is your friend”. The proverb signals that investors should not go against an intact trend.
Uptrends usually last longer than downtrends. On the other hand, the movements are more moderate, because a slide down is more dynamic than overcoming resistance on the way up.
>> Read here: Bear Market Rally or New Bull Market? Why fund managers mistrust rising prices
The last uptrend of this type was between mid-May and early June. During this time, the Dax rose to 14,709 points (highest on June 6). A sell-off then set in, causing the index to fall back to 12,400 points.
More interesting is an uptrend last fall. This movement began in early October 2021 and ended in mid-November: On November 18, the Dax reached a record high of 16,290 points. The consolidation that followed was moderate, with the leading index again reaching its record level by mid-January.
The market conditions are no longer comparable to the situation in autumn 2021 given the monetary policy turnaround that has been initiated, the high risk of recession and the general consequences of the war. But a look at the medium-term history can still strengthen the positive mood.
Individual values in focus
Unipers: Germany’s largest gas importer made a loss of more than twelve billion euros in the first half of the year. The high losses of the group will be largely passed on to German households from October. Nevertheless, Uniper expects losses for a long time to come. The share loses nine percent in the MDax to just seven euros.
Vonovia: Real estate values are coming under pressure across Europe. The Dax value Vonovia loses five percent. TAG Immobilien and Grand City Properties also lost significant value.i
Sanofi: The French pharmaceutical company ends the development program for its breast cancer drug Amcenestrant. The active ingredient missed the defined goals in a phase III late-clinical study, as the company announced on Wednesday. An independent review committee recommended stopping the study. All ongoing clinical trials with amcenestrant would be halted. There were no safety concerns. The share loses more than four percent in Paris.
Cinema World: The world’s second largest cinema operator suffers from a lack of blockbusters. The lack of film hits is affecting the income, it said on Wednesday. That will probably last until November. Cineworld warned that shareholders would have to reckon with a dilution of their shares. The London-listed share collapses by more than half.
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