Dusseldorf The German leading index Dax narrowly missed a new record high on Wednesday. At the daily high of 16,285 digits, the Frankfurt benchmark was at times only five points away from the previous record high. At the close of trading, the Dax was trading 0.7 percent up at 16,271 points.
Since yesterday, Tuesday with a high trading volume, it has been clear: the institutional investors are back on the stock exchange – and they immediately made groundbreaking decisions. Cyclical industrial stocks are now the favorites on the market, growth stocks as so-called corona winner stocks are sold in return.
This industry rotation will probably continue for some time, even if there are likely to be backlashes in the meantime because the riskier growth stocks are interesting for bargain hunters. This rotation will remain on today’s trading day. The DAX winners list is headed by Daimler, BMW, Volkswagen and Covestro, all so-called corona loser papers.
This entire development is also related to the fact that the German market has been gradually ending the pandemic mode since the beginning of December. This can be seen, for example, in the high price losses of the vaccine manufacturers, who each lost over 30 percent of their value during this period. On today’s trading day, Biontech’s paper initially lost around one percent on the German stock market, but then turned back into positive territory.
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The reason for the turnaround: The Mainz-based company had signed a new cooperation agreement with the US company Pfizer to develop an MRNA-based shingles vaccine. On Tuesday, the Biontech share was down around six percent.
The latest price losses in the shares of Qiagen and Sartorius, which fell 4.4 and 5.4 percent on yesterday’s trading day alone, signal the expectation of the imminent end of the corona pandemic.
This industry rotation away from growth towards industrials is related to the rise in yields on the bond market. Put simply, value stocks such as cyclical industrial stocks and banks benefit disproportionately from rising interest rates, while growth stocks, on the other hand, tend to develop weaker.
According to an analysis by Bank JP Morgan, investors were not only able to benefit disproportionately from value stocks with rising returns on US government bonds, but also achieve a higher performance with smaller stocks (small caps) than with the market as a whole.
In terms of regions, the focus is on Japan and the euro zone, while the US indices have underperformed slightly in the past with rising bond yields. A weaker share price development in the USA is likely to be related to the high market capitalization of the tech stocks.
Yesterday’s trading day was the best example of this: the yield on ten-year US government bonds rose to a peak on Tuesday from 1.62 to 1.67 percent. That made the industry-heavy Dow Jones index for a plus of 0.6 percent, while the technology index Nasdaq slipped by 1.3 percent.
This tendency should increase if US yields on a ten-year government bond were to push back into the range of 1.7 to 1.8 percent and then possibly exceed it. Then the bond markets are likely to initiate a new phase of interest rate hikes, which will presumably quickly expand into the range of 2.0 to 2.5 percent – with corresponding effects on tech stocks.
Even if the signs on the German stock market are currently pointing to a new record high, investors shouldn’t forget to look south. From a technical point of view, there is some support around the mark of 16,000 points. More important, according to technical analysis, is the upside gap that was torn on Monday this week.
Such gaps arise when there was no quotation in one area on two consecutive trading days. In the specific case, the highest point at the end of the year was 15,890 points, the daily low at the beginning of the year marked 15,943 digits. The gap would be closed at a price of 15,890 points. Below this, the 200-day line, which is important for long-term investors and currently has 15,551 meters, acts as further support.
Look at the individual values
Elring-Klinger: The shares reacted with a price increase of 16.70 percent to a buy recommendation from JP Morgan. The auto supplier has made the transition from the internal combustion engine to the electric drive and should now benefit from the trend towards e-mobility, wrote analyst Jose Asumendi. He therefore advised overweighting stocks. The order books are well filled, most recently almost two thirds of the orders received were no longer related to combustion engines.
Stabilus: A negative analyst comment sends Stabilus downhill. The auto parts supplier’s shares will fall by around four percent by the end of trading. The experts at JP Morgan downgraded the stocks to “Underweight” from “Neutral” and lowered the target price to 62 from 72 euros.
Uniper: An expansion of the credit lines is affecting the course. The shares of the energy company close 2.3 percent lower. “That signals a need for financing that is higher than expected,” says a stockbroker. “In addition, it doesn’t sound like a squeeze-out from Fortum is imminent.”
Deutsche Wohnen: A positive analyst comment lifts the MDax paper to the top. The real estate company’s shares rise 1.3 percent on Wednesday through close of trading. The experts at wealth advisor Kepler Cheuvreux upgraded the title to “Buy” from “Hold”.
Evotec: The drug researcher’s share price benefits from share purchases by CEO Werner Lanthaler and climbed 3.5 percent on Wednesday. Lanthaler acquired paper from its own company with a volume of more than 392,000 euros.
Tesla: Investors should watch out for the electric car maker’s stocks. Short seller Fraser Perring, known for his attacks on Grenke and S&T, announced on Twitter that he was again betting on price losses at Tesla. In the US trade, the paper was temporarily down 0.7 percent in the evening. Tesla’s market capitalization is $ 1.2 trillion. That is significantly more than the market capitalization of the manufacturers Toyota, Volkswagen, Daimler and BMW combined.
Here you go to the page with the Dax course, here you can find the current tops & flops in the Dax.