Dusseldorf After a long Easter break, the German stock market can pick up again. The focus is again on the psychologically important mark of 14,000 points, which was briefly undercut with today’s daily low of 13,991 points. One hour before the close of trading, the Dax is back at 14,191 points, an increase of 0.2 percent compared to the close of trading on Thursday. The leading index ended the past trading week up 0.6 percent at 14,164 points.
Auto stocks are the clear winners in today’s trading session. The VW and Continental shares each gained more than three percent, but the winner of the day was the Hellofresh paper with an increase of more than four percent. The shares of the corona vaccine pioneer Biontech slipped more than ten percent in Xetra trading.
The situation on the German stock market can be described as follows: After a climb of almost 2500 points from the beginning to the end of March with a short-term daily high of 14,925 points, the correction has been underway since the beginning of April. So far, this downward momentum since the beginning of the month has been significantly less pronounced than the upward momentum in March. This suggests that the Dax could soon start again towards 15,000 points.
Because despite the many uncertainties such as the upcoming interest rate hikes in the USA and the Ukraine war, the volatility index VDax has fallen well below the pre-war level. On the day of the Russian invasion at the end of February, the value rose to 36 percent and even reached 44 percent a few days later.
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China and US interest rates make investors hesitate
Selling pressure is low
This stock market fear barometer is currently back at 26 percent. Such a low value means that futures market professionals do not expect large price fluctuations in the next 30 days. For classification: Values below 20 percent signal quiet stock market phases.
Investor sentiment is also a reason to hope for a renewed increase towards 15,000 points. According to the Dax-Sentiment survey of the Handelsblatt, most investors have now adjusted their portfolios to a certain extent to these developments. So the selling pressure is low, but on the other hand there is little buying interest.
The simplified conclusion of this situation: Positive developments or the mere absence of further negative reports should ensure rising prices. Should the situation suddenly deteriorate, for example in the Ukraine war, there could of course be a sell-off. However, according to sentiment expert Stephan Heibel, who evaluates this weekly survey, such a sell-off is likely to be “short-lived”.
Government bond yields continue to rise
However, interest rates remain a burden. On both sides of the Atlantic, ten-year government bond yields are approaching the major and psychologically particularly important marks. In Germany this is the threshold of one percent, in the USA it is the three percent mark. For Thomas Altmann from the investment house QC Partners, one thing is certain: “We have reached a point where rising interest rates are putting the brakes on corporate profits and the economy.”
Apparently it is only a matter of time before these important marks are overcome. As recently as Friday, the yield on a ten-year US Treasury bond was 2.6560 percent, and today, at 2.912 percent, the value has reached its highest level since the end of 2018.
The yield on ten-year Bunds is now at 0.961 percent, its highest level in almost seven years. As recently as last Thursday, this value was now at 0.766 percent.
US Federal Reserve Banker James Bullard has again called for US interest rates to be raised to 3.5 percent by the end of the year in order to curb high inflation. But you can’t get there in one step, and the hikes shouldn’t be more than 0.5 percentage points per step, said the president of the St. Louis branch of the Fed on Monday evening.
However, the market is not expecting such high interest rates by the end of the year. The majority of professionals on the Chicago futures exchange CBOE expects an interest rate of between 2.5 and 2.75 percent by the end of the year. 3.5 percent, however, are considered unlikely.
Copper price continues to rise
Investors are stocking up on copper in anticipation of increasing demand from China with a simultaneous shortage of supply. The industrial metal rose in price by 1.7 percent to $10,488 a ton. In addition, protests by local residents hampered copper ore mining in Peru’s Las Bambas mine, analysts at ANZ Bank wrote. They are demanding higher financial aid for the region from the operating company MMG. Las Bambas supplies two percent of the world’s copper requirements. In the slipstream of the rising metal prices, the European index for the mining industry rose by up to 1.3 percent to a 14-year high of 758.38 points.
Look at individual values
Bayer: CEO Werner Baumann warns of drug shortages. “If there were new interruptions in the supply chains, the production of medicines could also come under pressure,” he told the “Bild”. The stock fell 1.1 percent.
Today, Tuesday, the shares Airbus and Beiersdorf are traded with a dividend discount. At Airbus, a dividend of 1.28 euros is paid, the closing price on Thursday was 106 euros. Beiersdorf pays a dividend of EUR 0.70 at a closing price of EUR 94.44 last Thursday.
Here you can go to the page with the Dax course, here you can find the current tops & flops in the Dax.