Dax recoups losses and closes near where it was yesterday

Dusseldorf Concerns about interest rates weighed on the stock exchanges in Europe on Wednesday, with Germany’s leading index, the Dax, managing to stem the losses that had meanwhile become more significant on Wednesday. At the end of trading, the Dax was at 15,400 points, just two points higher than the day before.

“The market fears central banks will need to raise rates much more to contain inflation,” said JPMorgan Asset Management strategist Kerry Craig. Investors are hoping for clues to further interest rate prospects from the publication of the most recent meeting minutes of the US Federal Reserve on Wednesday evening.

Despite the slight downward trend, the Dax is still moving sideways with a trading range of 400 points: On the upside, the high for the year on February 9 at 15,659 points has established itself as resistance.

On the underside, the level between 15,250 and 15,275 points has already proven to be support several times. The daily lows of February 6th, 7th and 10th are in this area. In view of the widespread expectation that interest rates will rise again, maintaining the current trading range would be a success for the Dax, explained capital market expert Thomas Altmann.

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So far, the leading German index has escaped a more massive downward trend. “Bargain hunters are still regularly trying to protect the German share index from the negative pull effect from New York,” judge the market experts at CMC Markets.

Dax stands out from its peers

In their opinion, only a slide below 15,240 points at the close of trading would activate a trend reversal. So if the buyers pull back, there is a risk of a stronger correction. Equally, their current resilience holds the chance of a continuation of the rally towards all-time highs as the uptrend remains intact.

The majority of investors in the US expect that the forthcoming publication of the minutes of the most recent US Federal Reserve meeting, the Fed, will point to a further tightening of US monetary policy. As a result, Wall Street suffered its biggest losses since December.

Wall Street expert Koch: “Dow Jones experiences the biggest daily drop of the year”

“The market fears that central banks will have to raise interest rates much more to contain inflation,” said JP Morgan’s Kerry Craig. The Fed could consider larger rate hikes again.

Ifo business climate index rises

Investors in Germany had therefore been eagerly awaiting the publication of the current business climate index – and were not disappointed. The mood in the executive floors of German companies brightened in February for the fourth month in a row. The Ifo business climate index rose to 91.1 points from 90.1 points in the previous month, as the Munich-based Ifo Institute announced on Wednesday in its survey of around 9,000 executives.

Economists polled by Reuters had expected an increase to 91.2 points. “The German economy is gradually working its way out of its weak phase,” said Ifo President Clemens Fuest. Although companies were less satisfied with current business than in January, expectations for the next six months increased.

Sentiment in industry climbed to its highest level since May 2022, mainly due to noticeably improved corporate expectations. “However, they assessed their current business somewhat worse,” emphasized Fuest. “Companies saw fewer new orders.”

Too much optimism? Inflation is accelerating

Despite the positive signals, there are enough warning voices. The current inflation figures are also rather pessimistic. In Germany, for example, inflation accelerated significantly at the beginning of the year. According to official data, consumer prices rose by an average of 8.7 percent in January compared to the same month last year. The rate of inflation was 8.1 percent in December and 8.8 percent in November.

Commerzbank chief economist Jörg Kramer was also cautious because of the weakening of new business. “For the export country Germany, an economic dip remains likely, but not a classic recession.”

The Ifo Institute itself sees it in a similar way. “The German economy will not be able to avoid a recession,” said the head of the Ifo surveys, Klaus Wohlrabe, to the Reuters news agency. “But this will be mild.”

There is no reason to be too optimistic, agrees chief economist Alexander Krüger from Hauck Aufhäuser Lampe Privatbank. Expectations have brightened mainly because people have gotten used to the war in Ukraine and the lack of new bad news. “Despite decreasing material bottlenecks, the economy is not out of the woods.”

The Bundesbank doesn’t exactly exude confidence in its current monthly report either. In contrast to the EU Commission, she continues to expect that German economic output will decline slightly this year.

Commodities are under pressure

Commodities are also coming under pressure ahead of the Fed minutes expected tonight. Brent crude oil from the North Sea and US light oil WTI both fell by more than 2.5 percent to $81.22 and $74.58 per barrel (159 liters).

Industrial metals such as copper, tin and zinc lost between 0.7 and 2.0 percent. Higher interest rates tend to strengthen the dollar, making commodities more expensive for non-US investors. Hopes of a recovery in Chinese demand limited the losses but did not erase them. According to analysts, the upswing has already been priced in.

The euro lost some ground and was last seen at $1.0623. The European Central Bank set the reference rate at $1.0664 on Tuesday.

Look at the individual values

Fresenius and FMC: In the leading index, the price development of Fresenius and Fresenius Medical Care (FMC) differed greatly: While the shares of the clinic and medical technology company slipped to the end of the index with minus 4.4 percent according to figures and statements on the future group structure, the 7.3 percent firmer titles were the dialysis subsidiary FMC is the undisputed leader of the Dax.

Telefónica Germany: Telefónica Germany (O2) also presented figures. For the first time in ten years, the subsidiary of the Spanish telecoms group Telefónica made a substantial profit on its own, which it attributed to billions in investments over the past three years and the resulting customer growth. The shares, which have performed well since the beginning of the year, were among the losers in the MDax with a minus of 1.1 percent.

Evonik and Wacker Chemie: The shares of the chemical companies Evonik and Wacker Chemie reacted differently to upgrades: Evonik shares closed 0.3 percent higher after the new “Overweight” recommendation by the British investment bank Barclays, shares of Wacker Chemie also became more expensive after an upgrade to “Overweight”. ‘ by Morgan Stanley by 5.7 percent.

ProSiebenSat1: The media company made headlines with a new major shareholder – the papers, however, recorded a minus of 0.4 percent. Renata Kellnerova has a stake of 9.1 percent, as the television group announced.

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