Dax remains in the red – Evergrande lets the payment deadline for bond interest expire

Dusseldorf The German stock market is going down again: The Dax lost 0.7 percent on Friday and ended the trading week at 15,531 points. Since the price slide to 15,019 points last Monday, the leading index had now climbed more than 650 points again.

The German stock market barometer managed to regain its old trading range with a plus of 0.9 percent yesterday, Thursday. From the end of July to mid-September, the Dax listed between 16,000 points on the top and 15,500 points on the bottom. The leading German index was able to defend this mark today. What was also noticed positively: The recapture was also accompanied by high trading volumes.

From a technical point of view, if the Dax manages to break the 15,800 mark, the leading index would certainly have potential for a new record high. For Jörg Scherer, technical analyst at HSBC Germany, this area is a “key brand”. Then, in his opinion, the “lightning slump” of the past few days would have to be interpreted as a “V-shaped” reversal, which would enable a new all-time high above 16,030 points.

It would be a surprise, however, if this brief consolidation continued. So far, the biggest setback in this stock market year is only a little more than six percent when viewed from a highest point. Specifically: From the record high of 16,030 points in mid-August, the leading index slipped on Monday of this week to 15,019 points, in 2021 the largest “drawdown” to date.

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This did not even meet the definition of a correction; that would only be the case with a minus of ten percent. There has only been one such rally without correction in the past 20 years: That was in 2003. However, under different circumstances.

At that time, after the technology bubble burst in 2001 and 2002, the leading German index was sold out and ripe for a longer recovery. That cannot be said of the 2019 and 2020 stock market years, despite the corona crash in the meantime.

A lot of movement with individual values

With prices above 15,600 points, the Frankfurt benchmark is now at a level comparable to that of a week ago, when the consolidation started. The same applies to the secondary equity index MDax.

Even if the two indices are on a comparable level overall, there was a lot of movement in the individual values. The biggest winners of these five trading days are travel and tourism stocks.

In the Dax, the shares of the engine manufacturer MTU rose by almost six percent during this time, the shares of the airport operator Fraport achieved almost ten percent. Lufthansa had also chosen the right time for a capital increase, the paper climbed by 8.6 percent. Shareholders of the world’s largest tourism group Tui could even look forward to an increase in value of more than twelve percent.

The losers in this five-day consolidation phase are not quite as easy to identify. Technology stocks and online mail order companies are definitely one of them. The biggest loser in the Dax was the new member Zalando with a minus of 9.2 percent, and Delivery Hero also fell by more than four percent.

Evergrande lets loan interest payments expire

Worries about the collapse of the Chinese real estate company Evergrande are not going away. The company let a widely publicized loan interest payment period pass without comment. Evergrande shares plunged 11 percent on the Hong Kong Stock Exchange on Friday, after having risen significantly the day before.

The second largest real estate developer in China has more than $ 300 billion in debt. Experts fear that a collapse will have serious consequences for the Chinese financial system. Some also consider effects in other countries to be possible.

Bond yields rise significantly

The bond markets are in correction mode. Prices fall and, in return, yields rise significantly. The yield on a ten-year US government bond climbs to 1.453 percent at the end of the Dax, which is the highest level since the beginning of July. This also applies to the ten-year federal bond, which cannot decouple from this trend. The yield rose on Friday to a high of minus 0.227 percent.

For Thomas Altmann there is a “whole bunch of reasons”. The crucial news comes from the USA. “Everything indicates that the US will remain solvent and that a government shutdown can be avoided,” says the asset manager. House spokeswoman Nancy Pelosi has signaled that Democrats will avert a government stalemate by passing a bridging bill that does not increase the debt ceiling. In addition, investors are pricing in a possibly faster pace for interest rate hikes by the US Federal Reserve.

Lira marks new record low against the dollar

The day after the surprise rate cut by the Turkish central bank, more investors are pulling out of the country’s currency. In return, the dollar rose 1.1 percent and, at 8.8710 lira, was just above yesterday’s record high of 8.7759 lira.

The euro gained similarly strong to 10.4010 lira and just missed a new record. Since the central bank also cashed in on its promise to keep the key interest rate above inflation, it undermines its credibility, warns Commerzbank analyst Tatha Ghose. There is a threat of an interest rate cut and devaluation spiral.

Ghose is sticking to the symbolic 10.00 forecast for the exchange rate between the dollar and the lira. This is not a fundamentally fair value, but a warning about the extent of the potential devaluation risk “that threatens through this opaque, inconsistent monetary policy”.

Look at individual values

Financial expert Navidi: “Evergrande is no exception”

Adidas / Puma: Disappointing quarterly results and a lowered annual outlook from Nike are affecting German rivals Adidas and Puma. The shares of the two sporting goods manufacturers lose by the end of trading as 2.5 (Adidas) and 3.1 percent.

Majorel: Investors sell the shares of the stock market debutant. The shares of the call center operator fell on Friday in Amsterdam by up to 7.6 percent to 30.50 euros. The Bertelsmann subsidiary had allocated the papers as part of the € 759 million issue at € 33 each and thus at the lower end of the range of € 32 to € 39. At the close of trading, the share was still just under 5.5 percent in the red – at EUR 31.20 per share.

With this IPO, Bertelsmann reduced its stake to 38.1 from 50 percent, but was still allowed to fully account for Majorel in the balance sheet. The customer care service provider was created in 2019 through the merger of the call center activities of the Bertelsmann subsidiary Arvato and the call center operator Saham. In the first half of the year, the company increased sales to 842 million euros.

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