Frankfurt The German stock market was initially in a mood of change on Wednesday, before there were clearer price drops in the afternoon. While the Dax initially seemed to continue Tuesday’s catch-up rally after the start of the stock exchange, it later changed direction. At around 2:30 p.m., the leading index was at 13,169 points – a drop of 1.1 percent from Tuesday’s closing price.
The MDax of medium-sized stock exchange companies also lost 0.3 percent on Wednesday to 26,444 points. The Eurozone leading index EuroStoxx 50 was down a good 0.5 percent.
Speculations about a scheduled resumption of Russian gas deliveries had triggered euphoria on the stock exchanges the day before. Several media had reported that Russian gas supplies are expected to resume on Thursday after maintenance work is completed. The Dax then rose by 2.7 percent.
Tailwind also came from the US stock markets on Tuesday, which in turn are benefiting from slight relaxation tendencies in prices at gas stations. There have already been voices believing that the worst of the current downturn is over. One analyst said it might be close to bottoming out.
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The leading index Dow Jones went 2.4 percent higher in the USA on Tuesday, at 31,827 points and thus close to the daily high. The broader S&P 500 rose 2.7 percent to 3,936 points. The technology-heavy Nasdaq even rose by a good three percent.
The price of crude oil initially weakened slightly on Wednesday to $103 a barrel, while bitcoin was trading at $23,000 after breaking through the trading range that had existed for a month.
The danger of a recession is not off the table
In Germany, too, inflation has slowed down somewhat, albeit at a high level. As a result of the Ukraine war, German manufacturers again raised their prices massively in June, but not at record speed.
Producer prices climbed by an average of 32.7 percent over the year, as the Federal Statistical Office announced on Wednesday. In May, the increase was still 33.6 percent and thus higher than at any time since the beginning of the survey in 1949.
Still, the issue of a recession is not off the table. Deutsche Bank Research sees a minus of around one percent for German GDP in 2023. In a “keep the gas tap closed” scenario, GDP could even drop by five to six percent in 2023.
In the three previous crises (financial crisis, euro crisis and corona crisis), the Dax had fallen back to its respective book value, according to the Landesbank Baden-Württemberg (LBBW). The Dax book value is currently almost 10,000 points.
In the event of a severe recession, a slump in book value is conceivable again. LBBW sees the Dax back at 14,500 points on June 30, 2023 and gold at $1,800 a troy ounce. Gold is currently valued at $1700.
The focus is tomorrow’s ECB meeting. “The ECB Governing Council will finally start normalizing interest rates at its next meeting. The Council announced a 25 basis point hike, but given June’s record high inflation of 8.6 percent, there could also be a 50 basis point hike,” said Martin Wolburg, senior economist at Generali Investments.
In addition, President Christine Lagarde should make it clear that the rate hike cycle has only just begun. However, the timing and size of future rate hikes depended on the expected mix of growth and inflation. Markets would therefore listen carefully to any comments on recession risks.
Look at the individual values
Netflix: The video streaming service Netflix lost less than half as many subscribers in the past quarter as management had feared. From April to June, the number fell by 970,000, the US group announced on Tuesday after the US stock market closed. In April, Netflix warned it would lose two million customers in the quarter. On Wall Street, the stock gained 5.6 percent.
Tesla: In Palo Alto, California, the electric car manufacturer Tesla publishes its figures for the second quarter. However, the news is expected to reach the markets after the US market closes. The stock gained 2 percent.
Akzo Nobel: The paint company Akzo Nobel is suffering from the corona lockdowns in China and falling demand for wall paints in Europe. Sales increased in the second quarter by 14 percent to 2.85 billion euros, as the Dutch company announced on Wednesday.
However, adjusted operating profit fell by more than a quarter to 249 million euros and was therefore below analysts’ expectations. Chief Executive Thierry Vanlancker said results were weighed down by the two-month lockdowns in China and de-stocking of DIY decorative paints in Europe. The stock lost 1.3 percent in the morning.
Boeing and Airbus: The aircraft manufacturer Boeing is currently scoring with aircraft orders at the air show in Farnborough, UK. This also gives the share in Frankfurt a slight boost of almost one percent. Airbus may also benefit. The share is still listed in Paris with a slight minus.
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