Such high price gains are not common. A daily gain of five percent, based on the closing price, was last seen in the Dax in May 2020 in the midst of the recovery after the Corona crash. The Dax last made more than five percent plus in trading on November 9, 2020, i.e. the day on which Biontech and Pfizer fueled hopes that the first Covid 19 vaccine would be approved soon. At the end of trading, the Dax was 4.9 percent ahead.
Despite the significant price gains, it has so far only been a relief rally, a countermovement in a downward trend that is still intact. The stock market barometer still has a long way to go before it ends.
Only at prices above 15,000 points would the currently red traffic light on the stock exchange change to green. The three important average lines that indicate the short-, medium- and long-term trend are also just above this important resistance level.
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But there is also reason for investors to be happy. Because with today’s price gains, the leading German index has significantly strengthened its tendency to stabilize. Last Monday’s high of 13,150 points has been surpassed. Such a fact attracts many bargain hunters into the market and some short sellers are now having to close their positions on falling prices.
The course of trading on Monday of this week is still of great relevance, as the Dax resisted a sell-off for the first time this stock market year and even made up for a minus of 650 points in the meantime. To put it another way: It was an important indication that the number of sellers who simply throw their shares on the market without considering losses or valuations has decreased.
Despite the upbeat mood, investors shouldn’t lose sight of the underside. This is about the mark of 12,438 points that was reached on Monday. It is the lowest listing in the still young stock market year, which has been a huge disappointment so far.
Investors should reckon with another test of the annual low, i.e. expect prices below 12,500 points again. At least, such a retest of the bottom was common in the major reversals of recent history, the March 2020 coronavirus crash and before the start of the November 2020 vaccine rally.
Carsten Roemheld, capital market strategist at the fund house Fidelity International, currently only sees a countermovement on the stock exchanges. “The final sell-off hasn’t happened yet.” The “Jojo-Börse” with its clear daily fluctuations will probably continue in the coming days.
Oil prices fall
The US import ban on Russian oil and gas initially pushed oil prices further on Wednesday. Both the North Sea variety Brent and the US variety WTI climbed around two percent. But in midday trading, prices slipped again. Brent is currently trading at around $125.70, down 1.7 percent. The WTI course also fell 1.9 percent, a barrel costs 121.40 dollars.
Probable reason: The International Energy Agency (IEA) is countering investors’ fears of oil supply bottlenecks due to blocked Russian inflows. The IEA is ready to release additional oil reserves to bring more oil to the markets, agency boss Fatih Birol said at an energy conference in Paris.
Oil prices have risen more than 30 percent since Russia invaded Ukraine and the United States and other countries imposed a raft of sanctions. However, Russian oil and gas exports were already being shunned before the ban as traders braced themselves for future sanctions.
According to analysts, Russia, as the world’s second largest oil exporter, will clearly feel the effects of the measures. Goldman Sachs expects more than half of Russian oil exported from ports to be stranded. JP Morgan estimates that around 70 percent of Russia’s sea oil will struggle to find buyers.
Fears of supply disruptions from Russia are likely to fuel prices further, said Hiroyuki Kikukawa, investment strategist at Nissan Securities. “But Monday’s highs are likely to cap in the near term as speculative buying is expected to slow soon and northern hemisphere countries head into spring when fuel demand falls.” Prices were at their highest levels on Monday jumped since July 2008, when Brent was trading at $139.13.
Exchange suspend trading in nickel
The prices on the metal exchanges are also calming down after their price explosion. The palladium used for autocatalysts, the main exporter of which is Russia, has fallen 3.4 percent to $3,072 per troy ounce. Aluminum, which is used in aircraft and automotive construction, is trading 0.5 percent higher at $3,519 a ton. Copper loses half a percent to $10,150. Trading in the nickel required for steel production, which had recently more than doubled in price to a record high, remained suspended on the LME. Meanwhile, the Asian futures contracts in Shanghai are not traded for a day.
Speculations about bottlenecks in supplies from Russia, one of the most important exporters of the raw material, had more than doubled the price in London on Tuesday and pushed it above the $100,000 a ton mark for the first time. In Shanghai on Wednesday, the price jumped 17 percent and hit a trading limit. Chinese nickel producer Tsingshan Holding Group, amid its bets on falling nickel prices, has had to buy large quantities of the metal to reduce costly margin calls, three people familiar with the matter said. That also fueled the rally.
Gold price falls
The price of gold is losing value again after significant initial gains. A troy ounce (about 31.1 grams) cost 2047 US dollars in the morning, meanwhile it is only 2013 dollars. As of Tuesday night, the price peaked at $2,070, just $5 below the August 2020 record.
Since the beginning of the invasion of Russia, the increase has accelerated. Since the end of 2021, the increase has been almost twelve percent; seven percentage points go back to the increase since the Russian invasion. In euros, gold has been going from one record high to the next for days. The current record is 1902 euros. But today, Wednesday, the price slipped 2.7 percent to 1829 euros.
In the opinion of Alexander Zumpfe from precious metal dealer Heraeus, “only a little metal comes back into the market”. Despite the high price, retail investors are reluctant to take profits by selling their holdings. Instead, all bar sizes are in demand, but especially small bars up to 100 grams. “There are currently very few reasons that speak against a rising gold price,” says the metals expert.
Ruble continues to slide
The ruble continues to go down. The dollar rose against the Russian currency by around ten percent to 131.50 rubles. The record high is 150 rubles. Traders describe trading as extremely illiquid. Trading in stocks and derivatives in Moscow has been largely shut down by the central bank since the beginning of Russia’s invasion of Ukraine.
Look at the individual values
German postal service: After a record result last year, the company is significantly increasing the dividend. In addition, the Bonn-based group announced another share buyback. The news sent the stock up 8.3 percent.
For the current year, however, Post boss Frank Appel was cautious: after a jump in profits for 222, he only expects stagnant operating results. The forecast does not include the economic consequences of the Russian invasion of Ukraine. In the medium term, the group intends to further increase its profits.
Adidas: The world’s second largest sporting goods group wants to increase its sales and profit by double-digit percentages this year. And this despite the withdrawal from Russia as a result of the Ukraine war. The share rose by 9.6 percent based on the forecast.
burning day: The chemicals trader defied supply bottlenecks and achieved record results. The shareholders are to participate with a dividend increased by ten cents to EUR 1.45 per share, giving the share an increase of over 5.5 percent.
Kloeckner & Co: The steel trader expects a drop in profits in the current financial year. The price dynamics will probably not be as strong as in the previous year, according to the annual report published on Wednesday. Therefore, the operating result will be significantly lower. In 2021, KlöCo had achieved the best operating result since its IPO in 2006. The share gained 2.9 percent.
German mortgage bank: In the small-caps index SDax, the share was the undisputed leader with a price jump of 19 percent. The real estate financier exceeded its profit target in the second Corona year, also thanks to an improved situation with loan defaults.
Siltronic: After the annual figures were presented, the shares went up by more than nine percent. The wafer maker proposed a 50 percent dividend increase after a profit jump and aims to be more profitable in 2022 despite rising costs.
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