Dusseldorf The focus on the German stock market is no longer the hunt for a new high for the year, but rather the question: How low can the leading index fall? However, the Dax stabilized on Wednesday after a weak start and was up 0.3 percent at 15,605 points in the course of trading.
Yesterday, Tuesday, the stock market barometer temporarily marked a new high for the year with 15,706 points. However, the speech by US Federal Reserve Chairman Jerome Powell, who promised more speed in interest rate hikes, subsequently caused the index to slip to 15,544 points.
There was a similar situation on February 9, when the Dax reached a new annual high of 15,658 points, but slipped into the red on the same day. The losses continued on the following day and totaled 400 points compared to the high for the year. So far, this pattern has not been repeated with the plus in today’s trading day.
Powell’s speech drastically changed the expectations of professionals. According to the Chicago futures exchange’s Fed Watch tool, only one in three had previously expected a 50 basis point rate hike during the March 22 session, compared to two-thirds.
The maximum interest rate is moving towards six percent. Almost one in three expects this level – however, there is still a majority that forecasts 5.75 percent at the end of 2023.
For the capital market expert Thomas Altmann, bonds are becoming an ever greater competitor for stocks. “If sub-investment-grade US corporate bonds are yielding around 6% for some maturities, then they may be a more attractive asset class for those who don’t want to invest for the long term or who have weaker nerves,” said the senior portfolio manager Investment house QC Partners.
Dax uptrend remains intact
Despite the losses, the upward trend in the Dax has remained intact since the beginning of the year. After evaluating several technical indicators, Martin Utschneider, technical analyst at private bank Donner & Reschel, is also certain: “The sideways mode at a very high level is continuing.”
Because the leading index has almost fallen back into the old days, in the sideways movement since the beginning of February, which is around 15,200 points on the underside. In the past five weeks, the daily closing price fell just a few points below this mark and, in retrospect, formed the starting point for a new high for the year. Therefore, this area offers itself as a stop-loss mark.
Heading in that direction, however, short-term investors should note the upside gap that opened last Friday. Such gaps arise when the lowest price of a trading day is above the highest price of the previous day.
Specifically: On Thursday last week, the highest price was 15,329 points, on Friday the Dax was not listed below 15,410 points. Such gaps are effectively a re-evaluation of the market because there has been no trading in that range.
>> Read also: These four Dax top performers offer further price opportunities
The sideways range may have increased from the original 400 points to more than 550 points due to the failed attempt on the upper side. This suggests that the movements in the Dax are likely to increase in the coming trading days. That would not be a surprise as the 400 point range in February was very narrow.
Labor market data in focus
The focus of today’s trading day is the US employment market report from the private ADP agency. This will give a first taste of the official job report for Friday of this week. A renewed strength in the US labor market should strengthen the probability of a 50 basis point rate hike.
Look at the individual values
burning day: Despite the inflation, the chemical trader managed to make a leap in growth last year and wants its shareholders to participate in this with a higher dividend. In addition, CEO Christian Kohlpaintner announced a share buyback, which the Bloomberg agency had previously forecast.
Brenntag shareholders are to receive a dividend increased by 55 cents to two euros per share. In the course of the planned share buyback, which is scheduled to start in March, around 10.5 million shares with a volume of up to EUR 750 million are to be acquired. That would be 6.8 percent of the share capital. The stock hardly changed during trading.
>> Read also: Brenntag ensnares investors with share buybacks and higher dividends
Continental: The auto parts supplier has surprisingly increased operating profit despite massive cost increases. Continental wants to reduce the dividend by 70 cents to 1.50 euros per share because net profit has collapsed due to various special effects. As a result, the share has risen by more than five percent at times.
Symrise: The investors in the fragrance and flavor manufacturer Symrise had to digest the business figures and cartel investigations presented because of possible agreements against Symrise and other companies. The papers slip at times by almost three percent.
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