Dax sell-off continues with a minus of more than 600 points – groundbreaking 15,000-point mark is tested

Dusseldorf At the beginning of the week, the escalating conflict over Ukraine probably dashed hopes that the stock markets would recover after the recent significant losses. The Dax went out on Monday at 15,011 points – a drop of 3.8 percent.

At 14,952 points, the Frankfurt benchmark had even fallen to a new low for the year, more than 650 points below Friday’s closing level. At the end of the week, the loss had already amounted to 1.9 percent, the leading index closed at 15,603 points.

Sustained prices below 15,000 points are likely to result in a longer lasting sell-off. Hopes for a relief rally would then be passé. For Martin Utschneider, technical analyst at the private bank Donner & Reuschel, “this is where the wheat is separated from the chaff”. Which is supposed to mean: If there is a significant drop below 15,000 jobs, many of the young traders who have been on the stock exchange since the corona rally are likely to say goodbye to the market.

Investors’ uncertainty was most evident in the prices of Russian shares: Investors are fleeing from fear of Western sanctions. Moscow’s leading index fell by more than nine percent on Monday to a 13-month low of 1,684 points. This is the biggest price slide since the Corona-related stock market crash in March 2020.

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The Russian currency also came under pressure. In return, the dollar was quoted at 79.47 rubles, the highest it was more than a year ago. As a result, the Russian central bank suspended its strategic foreign exchange purchases for the time being in view of the weaker rouble.

At the start of trading, there were still three indications that prices on the German stock market would soon rise again:

1. Sentiment survey signals a countermovement

The current Handelsblatt survey Dax-Sentiment confirms the forecast that there is likely to be a countermovement, but that a trend reversal is not yet in sight. Sentiment expert Stephan Heibel had forecast a sell-off like last Friday a week ago.

But this price slide did not create enough panic to create a sustainable bottom for the leading German index. According to sentiment analysis, panic among investors is an important indicator of a sustainable trend reversal.

2. Investment professionals rake in profits and support the market

The slide in prices on Friday, which peaked at 2.5 percent, also made many investment professionals happy. Because according to the Frankfurt Stock Exchange survey of institutional investors and private investors, 15 percent of professionals had previously bet on falling prices.

That’s not unusual. Because in order to outperform their benchmark, many professionals have to generate an extra return by speculating on falling prices in order to justify their investment costs.

What is astonishing, however, is that the professionals have landed on the spot with their speculation. After evaluating the survey, behavioral economist Joachim Goldberg predicted that the many professionals would resolve their short speculation in the range of 15,500/15,450 positions. The Dax slipped exactly into this area on Friday.

That this short speculation is now being sold is a support for the market. Because the shorts work like a short sale of hedge funds. At the beginning of a short speculation, the Dax is sold on the futures market and bought again when it is dissolved.

3. Technical indicators are signaling a recovery

Last week’s trading was a disaster on the US stock exchanges. The Nasdaq 100 tech index fell more than 7 percent in just four trading days after last Monday’s holiday. The stock market barometer is therefore considered to be oversold, i.e. it has fallen too low too quickly. That should cause a countermovement.

For Thomas Altmann from the investment house QC Partner, the Nasdaq 100 is oversold to a similar extent as it was at the peak of the Covid 19 sell-off in 2020. “A recovery is now more the norm than a surprise,” says the capital market expert before the start of trading .

The alleged danger of rising interest rates that weigh on the stock market is also not true. Stock market experience shows that markets are more volatile in the run-up to such interest rate increases.

But at the latest with the first rate hike, this uncertainty is over. That would be the case in the US in March. The first indications of how high the increase will be should be available on Wednesday this week after the US Federal Reserve meeting. In the initial phase, rising interest rates are to be viewed more positively if they are accompanied by increasing economic growth.

Look at individual values

SiemensEnergy: The descent continues. The shares of the energy technology group were now listed at 17.80 euros, the lowest they have ever been since the IPO in 2020. On Friday, the titles had recorded the largest daily loss in the company’s history at almost 17 percent due to ongoing problems at the wind power subsidiary Siemens Gamesa . Gamesa shares gained 1.8 percent in Madrid on Monday. The experts at Deutsche Bank are counting on a complete takeover by Siemens Energy and recommend buying the shares.

Delivery Hero: Among the individual values, the shares of the food delivery service attracted negative attention. They slipped to their lowest level since April 2020 and were down eight percent. Delivery Hero has been suffering from a sell-off in technology stocks and Corona winners for a long time.

Commerzbank: The bank has announced further charges related to foreign currency loans in Poland. Additional provisions of 436 million euros in the fourth quarter would reduce earnings. However, the bank still expects a positive consolidated result for 2021. The share lost 3.7 percent

Lufthansa: According to insiders, the company intends to take a stake in the Italian state airline ITA. It is about buying a 40 percent stake in the successor to Alitalia, which went bankrupt in 2017, two people familiar with the matter told Reuters. The stock fell a good five percent.

At the same time, the federal government’s Lufthansa share package, which is up for sale, arouses the interest of potential buyers. According to financial circles, the first investors have made inquiries with the federal government. This includes sovereign wealth funds.

Here you can go to the page with the Dax course, here you can find the current tops & flops in the Dax.

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