Dusseldorf For the second day in a row, the focus of the German leading index Dax is on the 14,000 point mark. In the afternoon, the stock market barometer recorded 14,029 points, a drop of 0.7 percent. On Tuesday, after an initial price slide to 13,887 points, the Dax was able to rise above this psychologically important mark again. It went 0.5 percent lower at 14,123 points from trading.
After hours, the Dax slipped below this level again due to weak US stock exchanges. But trading on Monday showed that the willingness to sell is not particularly high at the moment. There were enough buyers who used prices below 14,000 points to re-enter.
All of this has to do with the situation on the bond markets, which have also calmed down somewhat. Yields on many government bonds on both sides of the Atlantic climbed to new multi-year highs on Monday. However, some calm returned with the release of US inflation data of 8.5 percent. Investors reacted with relief that US consumer prices were broadly in line with expectations.
The yield on a ten-year US Treasury bond is currently 2.67 percent, down from 2.84 percent on Monday. The yield on federal bonds with the same term has also fallen from 0.87 percent to 0.78 percent.
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Investors were already able to observe how sensitive stock prices are to changes in bond yields before the official start of trading: The yield on the ten-year federal bond was 0.79 percent at the start of trading at 8 a.m., the leading index at 14,148 points. Within a few minutes, the return rose to 0.85 percent, and the Dax immediately lost 100 points. This dependence on bond yields is likely to dominate stock trading on Tuesday.
However, high inflation increases the probability of significantly higher interest rates in the USA. According to the “Fed Watch Tool” of the Chicago derivatives exchange CBOE, a clear majority of professional investors now assume that interest rates will be increased by 0.5 percentage points in the next two meetings of the US Federal Reserve on May 4th and June 15th. At the end of the year, the interest rate should then be between 2.5 and 2.75 percent. The range is currently between 0.25 and 0.5 percent.
Fear of a further escalation of the Ukraine war has investors turning to gold as a “safe haven”. The price of gold rose by up to 0.3 percent to $1,972 per troy ounce. However, gains were capped by a firmer dollar. “Gold is benefiting from some safe-haven demand this week as inflation fears mount, Chinese growth falters and the Ukraine war enters a second round,” said Jeffrey Halley, an analyst at brokerage firm Oanda.
Financial giants Blackrock and JP Morgan were among the first US companies to report first-quarter results. They were initially well received on the stock exchange. Both shares reduced their losses on the German stock market after the figures were announced, but then gave way again. Currently, the papers are again 2.2 percent (JP Morgan) and 1.6 percent in the red.
The world’s largest asset manager Blackrock increased its profit by almost 22 percent in the first quarter thanks to strong inflows into its funds. Adjusted earnings increased to $1.46 billion in the January-March period from $1.2 billion a year earlier. Earnings per share were $9.52. Analysts had expected an average of $8.75 per share for the quarter. Blackrock grew assets under management to $9.57 trillion by the end of March. A year earlier, the financial giant reported assets under management of $9.01 trillion.
JP Morgan’s profit fell 42% in the first quarter, weighed down by lower Wall Street fees and higher expenses. The country’s largest bank earned $8.28 billion, or $2.63 a share, compared with $14.3 billion, or $4.50 a share, a year ago. Analysts had expected $2.72 per share, according to FactSet. Meanwhile, the bank plans to buy back its own shares for $30 billion.
Goldman Sachs, Citigroup, Morgan Stanley and Wells Fargo will follow on Thursday.
The technical Dax situation
Overall, the situation on the German stock market remains rather fragile. Currently, rising prices are just a bear market rally, price gains within an intact downtrend. The situation is only likely to change fundamentally when prices are above 15,000 points – there is still a long way to go. The 200-day line, which is primarily considered by long-term investors as a possible entry signal, is listed at 15,365 points and is currently falling by eight points a day.
On the bottom, the range between 13,680 and 13,388 points is important. According to technical analysis, 13,680 points is the normal correction of the upward movement from March 7th to 29th, which ranged from 12,438 points on the downside to 14,925 points. Normal correction means a fall from the peak by 50 percent of the previous rise.
This upward movement would end if the Dax falls below 13,388 points, the maximum correction of the upward trend. The chart technicians would then focus on the previous year’s low of 12,438 points.
Look at the individual values
Eon/Covestro: In the Dax, the papers of the utility Eon and the chemical company Covestro are among the bigger losers with a minus of 2.4 and three percent. In both cases, the investment bank Stifel canceled its buy recommendation.
K+S: The stock was able to score with investors with an upwardly screwed earnings forecast. The shares of the fertilizer and salt manufacturer led the MDax winners with a plus of up to 5.3 percent. The group is now assuming even higher average prices in the agricultural business. The share has more than doubled since the beginning of the year.
Sartorious: An upgrade provides a tailwind. The laboratory equipment supplier’s share rose by 1.6 percent and took the lead in the Dax. The analysts from Berenberg put the stock on “buy” from previously “hold”.
Fraport: According to the airport operator, the upward trend in passenger numbers has continued. The freight business, on the other hand, declined due to the corona lockdowns in China. The stock fell 1.3 percent.
Shop pharmacy: The online pharmacy is taking over all shares in First A. The company, which was founded in Berlin in 2021 as a start-up, is currently one of the leading quick commerce pharmacy delivery services and offers drug deliveries within 30 minutes in five major German cities. The share is listed unchanged.
Car1: The paper loses 3.5 percent because investors apparently expected better business figures. The online used car dealer sold almost a third more vehicles in the first quarter than a year earlier. Sales increased by 30 percent to 169,600 units, including 14,550 vehicles via Autohero.
Nordex: The wind turbine manufacturer received an order from Peru for 23 turbines for the San Juan de Marcona wind farm. Nevertheless, the share fell 1.7 percent.
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