Dusseldorf The latest inflation data from the USA give stability to the German stock market. After the new data was published in the afternoon, the leading index Dax was only 0.2 percent lower at 14,165 points.
In the morning, the sell-off mood still dominated the market. In early trading, the Dax fell by up to two percent and slipped below the 13,900 mark. Investors sold stocks and bonds alike, and the cryptocurrency Bitcoin was not spared either.
Prices in the US rose by 8.5 percent in March compared to the same month last year. This is the highest level since late 1981 and is slightly above market expectations. However, at 6.5 percent, core inflation is 0.1 percentage points below forecasts in advance. Allianz’s chief economic adviser, Mohamed El-Erian, describes this fact as “a great relief for the markets,” as he wrote on Twitter.
US bond yields then remained stable. Ten-year US bonds are yielding 2.712 percent after hitting the 2.8 percent threshold in the morning. Two-year bonds yield 2.4321 percent.
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US bond yields have increased significantly in recent weeks. Since the yields develop inversely to the prices of such US bonds, there was a quasi-crash for these papers, which are supposed to be a haven of security. The prices of US bonds with a term of ten years fell from 101 percent to 91.89 percent during this period – a loss of more than nine percent within six weeks. Such a development takes several years at normal times on the bond market.
At the same time, securities with short maturities sometimes yield higher returns than those with longer maturities. That’s unusual because investors typically demand a higher yield the longer they commit, and is thought to portend a recession.
The yield on ten-year Bunds fell slightly again in the afternoon to 0.7725 percent. At 0.8 percent, it had reached its highest level since 2015.
But where is all the money going? The only beneficiaries right now are gold and silver. The price for a troy ounce (31.1 grams) of the yellow precious metal is currently 1973 dollars, silver costs 25.53 dollars. The gold price has thus broken out of its trading range that has existed since mid-March. Gold continues to defy rising bond yields and real interest rates.
“For most of them, the motto ‘Cash is King’ seems to apply at the moment,” says capital market expert Thomas Altmann from asset manager QC Partners. That in turn gives hope. “Given the fact that there are still penalty interest rates for holding cash in the euro zone, this situation should not last for too long.”
Look at the chart technique
From a technical point of view, the situation in the German stock market clearly deteriorated in the morning. Investors should currently focus their attention on the underside. The Frankfurt benchmark slipped below last week’s low of 14,027 points. The fact that things went up as a result can also be seen as a good signal in terms of chart technology.
The next important stop on the bottom is 13,680 points. There lies the normal correction of the upside from March 7th to 29th, which ranged from 12,438 points on the downside to 14,925 points according to technical analysis. Normal correction means a fall from the peak by 50 percent of the previous rise.
Look at oil and bitcoin
The first easing of the corona restrictions in the Chinese financial and economic metropolis of Shanghai are alleviating concerns about demand on the commodity market. The price of Brent crude oil from the North Sea has risen by around three percent to $102.51 per barrel. “The oil market is still vulnerable to a major shock if Russian energy is sanctioned, and that risk remains on the table,” said Edward Moya, market analyst at brokerage firm Oanda.
However, the Brent price has fallen more than 30 percent since early March. At that time, a barrel was traded at $ 139.13 in the meantime.
Cryptocurrency bitcoin continued its slide, slipping below $40,000 overnight Monday – down nearly 10 percent from Sunday night’s high of $43,500. Bitcoin is currently trading at $40,612. The performance of the cryptocurrency market appears to be broadly following that of the stock markets.
Look at individual values
Deutsche Bank/Commerzbank: After the US hedge fund Cerberus, the two German financial institutions are losing another major investor. On Monday evening, the investment bank Morgan Stanley offered two blocks of shares in the two major banks, each of more than five percent, from the same investor. This is Capital Group. The packages should bring a total of 1.75 billion euros.
According to the commissioned bank, 116 million Deutsche Bank shares are to be sold at a price of at least EUR 10.98, which is almost eight percent less than the Xetra closing price on Monday. 72.5 million Commerzbank papers are to be placed for EUR 6.55 each, a good six percent below the closing price.
The discount is relatively high, in many cases the discount is five percent. Accordingly, the price of the two shares slipped significantly. Deutsche Bank and Commerzbank titles lose more than eight percent in the Dax and MDax.
Defense stocks: Armor values were again in demand for the individual values. Shares in the Italian armaments group Leonardo rose by up to four percent. Deutsche Bank analysts upgraded the stock to a buy on expectations of higher defense spending in the company’s main markets. Investors also sensed rosy business prospects at Rheinmetall. The titles led the list of MDax winners with an increase of more than three percent, but gave up part of the profits.
Evotec: The Hamburg biotech company grew significantly last year thanks to higher milestone payments from its partnerships. However, the share loses two percent in a weak market environment.
Dermapharm: The Group can look back on the most successful fiscal year in the company’s history. Sales and profit increased significantly. The paper gains 1.7 percent, but returns its gains later. The drug manufacturer also intends to significantly increase the dividend for the past year. The Board of Management and the Supervisory Board propose a distribution of EUR 2.17 (previous year: EUR 0.88) per share,
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