Dusseldorf For the third day in a row, the Dax tried to recover, but this time with success. In contrast to the two previous days, the leading German index held its ground after a friendly start. He crossed the finish line 1.56 percent higher at 12,594.52 points, about halfway through his daily range. The MDax gained 1.40 percent to 24,979.41 points.
The trading range on Tuesday was 480 points. Investors rarely experience such a range. Accordingly, according to the daily survey on the development of today’s trading day on the Handelsblatt website, two thirds expected a negative course.
It is interesting to observe how positive news has so far had no effect on stock prices in such stock market phases. On Tuesday it was the Chinese Purchasing Managers’ Index, which despite a rapid increase could not slow down the sell-off.
Top jobs of the day
Find the best jobs now and
be notified by email.
And on Wednesday, the price of oil slipped below the $100 mark for the first time since May of this year, at least the price of the US variety WTI. A barrel (159 liters) of North Sea Brent currently costs a little more. And Citigroup thinks it’s possible that the price will fall to $65 by the end of the year.
If this slide below the $100 mark proves sustainable, it would take some of the pressure off the high inflation rates. And the central banks would no longer have to raise interest rates so much so quickly.
This development is already making its mark on the Chicago futures exchange. A Fed interest rate of 3.5 to 3.75 percent was still the most likely development for futures market professionals a week ago. 47 percent believed it at the time. Now that share has fallen to 17.6 percent. Almost half are now expecting an interest rate of 3.25 to 3.5 percent by the end of the year.
However, an increase of 75 basis points is firmly planned for the upcoming US Federal Reserve meeting on July 27th. At least that’s what 85 percent of professionals expect. The Fed’s interest rate is currently in a range between 1.5 and 1.75 percent.
The weak euro exchange rate is also an additional economic stimulus package for the export-oriented German economy. Products made in Germany are now cheaper abroad and therefore more attractive. On Tuesday, the euro almost halved the gap to parity against the dollar. On Wednesday, the price continued to decline and slipped below the $1.02 mark. It is currently $1.0269.
At the same time, the valuation of German Dax shares in the form of the price-earnings ratio has fallen to a new ten-and-a-half-year low. The low prices and the low valuation are now making shares more attractive again.
gas crisis burdened
But the impending gas crisis remains a key stress factor. The markets have increasingly priced in the scenario. This is supported by the significant increase in the European gas price, which peaked at over 175 euros on Tuesday.
Especially since this time – in contrast to the increase in gas prices at the beginning of the war – the longer-term gas contracts (for deliveries in the winter and for deliveries in one year) are also affected by this increase. “The gas market is thus pricing in the scenario of a long-lasting supply crisis,” says Commerzbank analyst Ulrich Leuchtmann.
Meanwhile, some investors cashed in on the natural gas market today, Wednesday. The European future fell by eight percent to EUR 159.60 per megawatt hour. The trigger for this is the intervention of the Norwegian government to end the strike of the local oil and gas workers, the analysts of the industry service Engie EnergyScan wrote.
Meanwhile, investors’ fears of a fall in demand continue to push the copper price down. The industrial metal fell 2.8 percent on Wednesday and was quoted at $7,807 a ton.
The most important brands of chart technology
The technical situation on the German stock market is clear: the sell-off on Tuesday expressly confirmed the downward trend of the past few months. In the opinion of Jörg Scherer, technical analyst at HSBC Germany, “the share barometer should regain the old low of 12,619 points from the end of June as quickly as possible in order to banish the greatest selling pressure”.
Hopefully the 12,300 and 12,000 point marks on the underside will provide support. On the other hand, the next horizontal support in the form of the low from the end of October 2020 at 11,450 points is still a long way off.
Look at the individual values
Delivery Hero/Hellofresh: The two hard-hit stocks benefited from a deal between Just Eat Takeaway and Amazon. In the wake of Just Eat Takeaway, which rose by almost 17 percent in Amsterdam, Hellofresh gained a good six percent at the top of the Dax. Delivery Hero’s paper in the MDax was up seven percent at one point, but gave up most of the gains. The EU competition watchdogs have searched the offices of the food delivery service in Berlin on suspicion of cartel formation.
Software AG: A negative analyst comment affects the course. The shares of the software house fall against the trend by 1.9 percent to 28.66 euros. Barclays Bank experts downgraded the stocks to underweight from equal weight.
Continental: A positive analyst comment gives tailwind. The shares of the auto supplier rose by 1.4 percent to 63.42 euros. The experts at Barclays Bank upgraded the shares to “Equal Weight” from “Underweight” and raised the price target to 70 from 65 euros.
Nordex: The investment bank Stifel has downgraded Nordex from “buy” to “hold” and lowered the price target from EUR 20 to EUR 9. The manufacturer of wind turbines was “drifted off course”, as stated in the study available on Wednesday. Analysts significantly capped their operating margin estimates through 2024, and anticipate immense capital burn during that period. The share yields 0.6 percent and costs 7.86 euros.
Here you can go to the page with the Dax course, here you can find the current tops & flops in the Dax.