Dusseldorf After three trading days with significant price gains, the German stock market took a breather on Thursday. The Dax closed 0.4 percent lower at 14,436 points.
The trading range, i.e. the distance between the high and low of the day, was 102 points. This is a comparatively low value. Trading volume was average.
Job data from the USA proved to be a burden. The bottom line was that 235,000 jobs were created in December, as the personnel service provider ADP announced on Thursday. Experts polled by the Reuters news agency had only expected job growth in the private sector of 150,000.
A robust job market fuels concerns of a tight rate hike cycle. The Fed has always made a stable labor market a condition. Good data – actually a signal of good economic development – are accordingly passively interpreted on the stock exchange.
On Friday, the US government will release its jobs report, which will also include public sector jobs. Economists are expecting continued solid nonfarm payrolls growth of 200k in December, after an increase of 263k in November.
In the first three trading days of the 2023 stock market year, the leading German index climbed 570 points. The price development on Thursday is therefore no surprise, because such high profits paired with an extremely high trading volume allow the conclusion: Both the buying interest and the buying pressure, not to miss a rally, are likely to subside for the time being.
Compared to the start of the year and also to the last trading week of the old stock exchange year, the turnover in the 40 Dax titles on Wednesday was more than twice as high with 76 million traded shares. “Those who followed the market and finally had to buy did so yesterday,” says Thomas Altmann from the investment company QC Partners.
Despite all the joy about the high price gains since the beginning of the year: The Dax has remained in its consolidation phase since mid-December. From a purely formal point of view, the leading index would only switch back to the medium-term rally mode if the historical high of the upward movement of 14,675 points was overcome.
So far, the setback since mid-December has been around six percent and is thus a confirmation of the medium-term rally since the end of September, when the Dax slipped to 11,862 points.
Professionals are “mentally fully booked” for 2022
There is a good chance that the leading index will rise towards 15,000 points in the coming days and weeks. Because according to the current survey by the Frankfurt Stock Exchange, the medium-term oriented investment professionals have no positions that stand in the way of a further rally. The mood among institutional investors has deteriorated, the sentiment index of the Frankfurt Stock Exchange has fallen significantly. That means: Many professionals have separated from their commitments and are now waiting.
However, the explanation for the behavior is probably not related to a pessimistic attitude, but rather lies at the turn of the year. The new stock market year regularly sees a new start for the professionals. According to former currency trader Joachim Goldberg, Germany’s leading sentiment expert, the profits and losses accumulated up to that point will be “mentally booked out”.
The level of 13,923 points, the closing price of the past stock market year, is now decisive for the professionals. This score is the benchmark for many asset managers who invest in the German stock market, since the return on their investment vehicles must be able to be measured against the Dax performance.
Private investors are not under this pressure, most of whom have bet on rising prices in the past few trading days. This is remarkable for Goldberg because there were hardly any really cheap entry opportunities for stock purchases in the trading days. “Has the mild weather contributed to a reassessment of the energy situation in this country and the resulting consequences for growth and inflation?” asks the behavioral economist.
The Dax sets the pace – that entails risks
The medium-term rally on the German stock market is unusual because the Dax has set the pace for the leading US stock exchanges. Usually it’s the other way around.
Stock market expert Koch: “A rally on Wall Street is not in the interest of the US Federal Reserve”
In the five weeks since the beginning of December, the leading German index has outperformed the US technology index Nasdaq 100 by 19 percent. The broader S&P 500 remains an outperformance of six percent. In Altmann’s opinion, this development could become a burden. “Because it’s quite possible that some will use these performance differences to switch into US equities,” he explains.
Look at the individual values
synlab: The share of Europe’s largest laboratory operator fell in the SDax by seven percent to 10.83 euros and thus to a new record low. The background is an investigation by the Portuguese antitrust authorities against several medical diagnostics providers, including Synlab. The drop in prices was probably exaggerated because only one country was affected, said a trader.
Per seven Sat 1: The media group’s papers were downgraded from “neutral” to “underperform” by Bank of America and the price target was capped from EUR 9.00 to EUR 7.10. The share lost 2.4 percent.
Südzucker: The stocks were one of the favorites in the small caps index with a plus of three percent. Analyst Alexander Neuberger from Bankhaus Metzler wrote that the prospects on the European sugar market had improved significantly.
Lufthansa: The papers of Lufthansa, which increased by 1.8 percent, were also in demand. They were buoyed by positive industry sentiment after low-cost carrier Ryanair raised its fiscal year targets. The German airline itself had raised its profit target as early as mid-December due to high demand for flights, and this again and again.
Morphosys: Investors threw Morphosys shares out of their portfolios after an outlook for the blood cancer drug Monjuvi. The biotech company’s shares fell nearly 6 percent. For 2023, the bottom line is that product sales for the drug in the USA can be expected to be between 80 and 95 million dollars, the company said. Last year, Monjuvi’s US revenue was $89.4 million. Morphosys stock has lost around 85 percent of its value over the past two years.
Hugo Boss: The stock went up 2 percent. In addition to strong sales figures for the Next Group from Great Britain at Christmas time, the market also referred to share purchases by CEO Daniel Grieder in the amount of just over one million euros.
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