After the Dax had been up 0.8 percent in the morning, it slipped 0.4 percent into the red with the publication of US consumer prices. By the end of trading, the Frankfurt stock exchange barometer had recovered again.
“The index is surprisingly robust this week,” commented Konstantin Oldenburger, market analyst at CMC Markets, on the development. “Even if the market seems directionless at first glance, always waiting for the next news and events, a break above 15,740 points could still be ahead of the weekend and might do wonders in terms of momentum.”
To do this, however, the Dax has to overcome a number of barriers. The decisive factor is whether it overcomes the range between 15,616 and 15,668 points. All three important average lines are noted there, which reflect the short, medium and long-term trend – from the 38 to the 100 to the 200-day line. For a breakout to the upside, these three lines would have to be sustainably exceeded.
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“Everything stands and falls in the short term with the resistance barrier of 15,616 to 15,668 points,” said Martin Utschneider, technical analyst at Donner & Reuschel, before the start of trading. The expert chooses an unusual comparison. “The Dax is like a camel in front of the eye of a needle,” he explains. “This one seems to be literally ‘clogged’ though.”
On Thursday, higher-than-expected US inflation data halted the Dax. In a matter of minutes, he slipped down more than 100 points. The consumer price index rose 7.5 percent in January, ahead of the median estimate of 7.2 to 7.3 percent. This is the highest inflation rate since February 1982.
Significant rate hike likely in the US
This data makes a US rate hike of 50 basis points more likely. According to the Chicago futures exchange, around half of the professionals now expect such a step. Before the inflation data was released, that figure was 23 percent.
In response, the indices on the US stock exchange also fell, but recently limited their losses. The yield on a 10-year government bond rose to its highest level since mid-2019 at 1.9945 percent and is on the verge of rising above the important 2 percent mark.
In any case, based on the behavior of the professionals, it is currently difficult to assess which direction the German stock market will take in the future. The results of the current sentiment survey conducted by the Frankfurt Stock Exchange among medium-term institutional and private investors provide little information on this.
The new, slight optimism that is reflected in the sentiment index is hardly suitable for triggering larger Dax movements – neither on the way down in the form of massive stop-loss sales by the bulls nor as a significant brake due to any profit-taking the way up. According to Joachim Goldberg, there could be initial sales between 15,700 and 15,750 points.
However, the first signs of uncertainty are beginning to spread among investment professionals. To understand this, you need to know their behavior over the past few weeks of trading. A small group from this investor segment – in the previous week it was ten percent – has benefited from the significant fluctuations of the past few weeks.
Sign of increasing control deficit
During this time, these professionals not only used the highs to sell, but also went “short” at the same time, i.e. bet on falling prices. On the underside, the game went the other way around: when the Dax was last listed just over 15,100 points, they changed sides, i.e. went “long” instead of “short”. But this time, not ten percent, as in the previous week, but only five percent changed sides. The other half probably just pocketed their profits.
Despite a small series of successes over the past few weeks, the professionals no longer seem to unconditionally want to use the Dax weakness for purchases. This is a first sign of a growing control deficit.
In Goldberg’s opinion, domestic, medium-term investors are currently only able to play the role of an extra. Until the beginning of February, long-term capital flows would have dominated trading.
In the USA, too, private investors are waiting after the correction at the beginning of the year. According to the latest survey by the American Association of Individual Investors (AAII), the proportion of neutral investors is 40 percent, the highest proportion since early 2020. Such a development can have a trend-reinforcing effect if neutrals spot a new movement.
Historic crash for Delivery Hero
The Dax group Delivery Hero exceeded its most important growth target in the past year. But the balance sheet shows that we still have a long way to go to be in the black. The environment of rising capital market interest rates is likely to make this path even more difficult. The stock closed 30 percent down.
With the daily low of 44.74 euros, the paper even slipped below the lowest level during the corona crash in March 2020. The share certificate was last listed at a lower level in December 2019.
Asset manager Markus Schön describes this process in one sentence: “When interest rates rise, the insubstantial values go under”. Without the zero interest rate policy of the central banks worldwide, Tesla, Netflix and Facebook would never have become so valuable, says Schön. However, these companies have the prospect of making money or are already doing so. If growth is not enough, there are also historic slumps there, as shown by the meta-record loss of almost $300 billion in market capitalization in one day.
In his view, Delivery Hero is an “air number” that buys low-margin sales with loans in order to eventually have a dominant position in the market. The latter is an illusion, so that in the end only the substance of the technical platform at Delivery Hero has to be evaluated. In his opinion, their value is between 15 and 20 euros per share. “Therefore, the slide in prices and the panic are only the beginning of the sell-off at such values,” says Schön.
Look at other individual values
Siemens: The Group started the new financial year with high growth rates. CEO Roland Busch said on Thursday before the Annual General Meeting: “Our results impressively show that we are pioneers in accelerating digitization and sustainability.” The growth was successful, although Siemens is also increasingly feeling the problems in the supply chains. The share rose by 4.7 percent and led the Dax list of winners.
Susan: For the first time since the IPO in April 2021, a shareholder in the Nuremberg-based Linux software provider has parted with a larger block of shares. The investment bank Goldman Sachs placed three million Suse shares for around 81 million euros with institutional investors, as the bank announced. The shares were allotted for €27, seven percent below Wednesday’s closing price. That pushed the share down 5.5 percent to EUR 27.40. It was initially unclear who was behind the sale. By far the largest Suse shareholder is the Swedish financial investor EQT with more than 76 percent.
Bechtle: Despite an increase in sales and profits in 2021, the company could not score with investors. The shares of the IT system house fell by 10.5 percent. The end of the year was weaker than expected, judged the Jefferies analysts. “Now all eyes are on supply chains for the first half of the year.”
Metro: The company is wowing investors with a more optimistic view of the current year. The wholesaler expects to end up at the upper end of the forecast range. The shares rose by 10.7 percent to 10.16 euros. This means they are higher than they have been for eight weeks.
Linden: The business of the industrial gases group continues to run smoothly, mainly thanks to high demand from the healthcare and electronics industries. The bottom line was a profit of around $3.8 billion after $2.5 billion in the previous year. The stock rose 3 percent.
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