Dusseldorf There may be signs of a trend reversal in the markets on Monday. Reason: The yields on benchmark bonds in the USA and Germany have risen to their highest level since the beginning of the corona pandemic. A further increase is unlikely to leave the German stock market unscathed and at least cause higher fluctuations.
The evaluation of the Handelsblatt survey Dax Sentiment does not indicate any relaxation either. Despite the falling prices in the past two days, optimism about the future has declined. Few investors see the low prices as an entry opportunity, and willingness to invest has also decreased.
The further development of the stock markets depends on the answers to two questions: Will the Omikron variant of the coronavirus lead to lockdown measures? Will higher inflation rates force the central banks to end their loose monetary policy much faster than previously expected?
The stock market year 2022 had started brilliantly, but slight weaknesses have crept in since last Wednesday. This negative trend continued on Monday. The Dax closed at 15,768 points, 1.1 Percent in the red.
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The simultaneously weak euro with a minus of 0.5 percent against the dollar suggested that foreign investors are also withdrawing funds. Last Friday, the Dax slipped to 15,862 points and ended the trading week 0.7 percent in the red at 15,948 points.
Investors should keep an eye on the 15,800 point mark on the downside. According to a survey by the Frankfurt Stock Exchange, there is again demand from institutional investors in this area. According to the technical analysis, there are also important support brands there. With a daily closing price below 15,800 positions on the Dax, the hope of a successful month on the stock market in January would be a thing of the past. The seasonal strength in the first trading weeks of a new stock exchange year due to fresh investor money would then only have lasted for three days – a low value compared to other years.
High inflation rates are driving government bond yields
The high inflation rates in Germany and Europe and, most recently, the significant increase in hourly wages in the USA have pushed government bond yields up noticeably. The ten-year US government bond reached 1.8 percent last Friday after the stock market closed in Germany, the highest value since the beginning of the pandemic. On Monday, the value initially climbed further to 1.808 percent. At the close of the German stock market it was 1.794 percent.
Analysts think it is possible that the US yield will quickly rise to two percent. In the medium term, the way would then be paved in the direction of 2.5 to 3.2 percent – this is where the yield peaks from 2013 to 2018 were. Investment professionals expect three interest rate hikes this year, the first likely to take place in March.
International fund managers wanted to sell shares in May 2021 at the mark of two percent return on a ten-year US government bond. If this view is still valid, market experience tells you that the first sales will take place before this round brand.
Last Friday, the ten-year federal bond reached minus 0.031 percent, its highest level since mid-May 2019. With an interim minus 0.025 percent on Monday, the interest rate turnaround was not far away. At the close of the stock exchange in Germany, it fell back to 0.038 percent.
A clear decision on the further direction of yields could be made on Wednesday. Then the US inflation data will be released.
Look at further individual values
Sector rotation continued unabated on the first trading day of the week: blue chips were bought and high-growth stocks were sold. In the Dax, the papers from Fresenius, Fresenius Medical Care and BMW were ahead. The list of losers was led by the shares of the laboratory equipment supplier Sartorius, followed by Siemens Healthineers shares and those of the cook box mail order company Hellofresh.
BMW: A positive analyst comment left the share 1.9 percent to 95.60 euros rise. The experts at Goldman Sachs had upgraded the title to “Buy” and raised the target price to 123 from 110 euros.
Adidas: The sporting goods company started with its announced share buyback. By the end of March alone, Adidas wants to acquire its own papers for up to one billion euros, as the company announced. Overall, Adidas wants to buy its own shares for up to four billion euros by 2025 and thus distribute capital to the shareholders. The acquired papers are to be withdrawn and the share capital is to be reduced. The paper was down 1.2 percent.
Delivery Hero: The globally active food delivery service from Germany has redeemed part of its stake in its Latin American competitor Rappi. In the past few months, a stake worth $ 150 million has been sold. Now the Dax group still holds just under eight percent of Rappi worth around $ 400 million.
Delivery Hero also plans to part with the rest of the stake in the course of time in order to concentrate on other investments. Delivery Hero recently acquired a majority stake in its Spanish competitor Glovo.
The share fell 3.9 percent on Monday. Last week, the loss in value was more than 13 percent.
First signs of panic among Bitcoin investors
The first signs of panic reigned among crypto investors. This is shown by the data of the Handelsblatt survey and the survey by the analysis company AnimusX, which have reached an extremely negative value. Such a mood is helpful for a long-term bottoming out. And that mood is unlikely to have improved. Because on Monday, Bitcoin slipped below the $ 40,000 mark for the first time since September.
A comparatively negative mood already prevailed in May of last year, when the Bitcoin price was quoted at around $ 40,000. In retrospect, the mood was the prelude for several months of bottoming out, which reached its lowest point in July with a brief slide below the 30,000 mark.
At the beginning of September the price was quoted again at $ 52,000. However, due to their lower history, these data are less informative than other sentiment surveys.
Here you go to the page with the Dax course, here you can find the current tops & flops in the Dax.