Dusseldorf After the recent losses, the German stock market recovered moderately on Wednesday. The Dax rose by 0.2 percent to 13,220 points by the end of trading. The leading German index is thus back to the level of mid-July.
In the meantime, the Dax has given back more than half of the price gains of the summer rally, which lifted it from 12,390 to 13,947 points from the beginning of July to mid-August. Inflation, recession and rising interest rates – this cocktail of fears is currently causing unrest on the stock exchange. It is interesting to note that government bond yields develop inversely to share prices.
At 1.37 percent and 3.09 percent, the values for a ten-year federal bond and a US government bond with the same term are roughly at the level of July 21 – just like the Dax. The interim drop in yields to 0.7 percent and 2.6 percent made the summer rally on the stock exchanges possible. As a result, the further development of the stock market in the coming days and weeks will depend heavily on the yields on the bond market.
Another relevant value for the stock market is the gas price, which is establishing itself at a high level. After falling to 260 euros for the September contract at the close of trading on Tuesday, the price temporarily rose again to 287 euros on Wednesday, an increase of around seven percent.
Top jobs of the day
Find the best jobs now and
be notified by email.
This is the TTF futures contract for Dutch natural gas. It is regarded as pointing the way for the European natural gas market.
In the past week, natural gas was traded at a peak of just under 251 euros. Only in the period immediately after the outbreak of the war in Ukraine was the price of natural gas traded in Europe briefly higher, peaking at more than 300 euros in early March.
Brent crude oil initially rose in price by up to 1.7 percent to $101.90 per barrel, before falling below the $100 mark again in the evening. Speculations on further production cuts by the Organization of the Petroleum Exporting Countries (OPEC) had temporarily pushed the price up. Statements by the Saudi Energy Minister were interpreted in such a way that the oil cartel might want to counteract the resumption of Iranian oil production, it said.
Technically, the German stock market barometer is battered after the losses in the past few days. According to Martin Utschneider, technical analyst at private bank Donner & Reuschel, if the 13,000 point mark is broken, the short-term target price will be 12,655 points.
Just below that are probably the last marks that could prevent another crash from a technical point of view: on the one hand, the multi-month low from April with 12,438 points and on the other hand the low for the year with 12,390 points. On the upside, only values above 13,500 would take the greatest pressure off the German standard values.
Lira remains near record low
The extent to which market participants adjust to a recurring pattern can currently be explained using the Turkish lira. President Recep Tayyip Erdogan has again rejected interest rate hikes in Turkey. Nevertheless, the lira rate does not fall further. The currency remains at 18.14 lira to the dollar, near a record high of 18.36 lira.
It used to be different. After such announcements, the Turkish currency slipped significantly. Now, according to Commerzbank FX analyst Tatha Ghose, it’s “an all-too-familiar pattern that doesn’t even contain a covert element of surprise.”
In the past, market participants always assumed that Erdogan would abandon the view of falling interest rates when faced with the reality of high inflation and a depreciating lira.
For Erdogan, however, fast investments and thus a strengthening of the supply side are the right way to combat inflation.
“But the sticking point is that Turkey needs a lot of foreign capital to close the gap between the required investment rate and Turkey’s low savings rate,” says Ghose. However, in the absence of a sensible policy framework, this foreign capital will increasingly hesitate – even if this only becomes apparent in the longer term.
The euro remains below par with the dollar
The common currency, the euro, also remains under pressure after slipping to a 20-year low below $0.990. The low showed that the downside risks were dominating, especially since an interim attempt at recovery via parity failed, summarized the analysts at the Hessisch-Thüringische Landesbank (Helaba). On Wednesday evening, one euro cost $0.9969.
In view of “the looming energy crisis and the associated risk of recession, the price should remain below par for quite a while,” said Jürgen Molnar, capital market strategist at RoboMarkets. “But there is always the possibility that the euro will fall even more sharply against the dollar.”
Look at the individual values
hellofresh: The stock closed Wednesday down 1.3 percent. Although Deutsche Bank has maintained its buy recommendation for the paper, it has lowered its target price from EUR 70 to EUR 54. That would still be double the current listing.
CTS Eventim: The company was able to convince with its quarterly figures. The return of concert operations after the compulsory Corona break makes the tills ring at the ticket broker. The shares are up 2.6 percent by the close of trading.
Hugo Boss: A gloomy outlook for the US brand fashion retailer Nordstrom initially pulls the paper down, but as trading continues, the boss shares recover and close 0.3 percent higher.
SFC Energy: Away from the major indices, strong half-year figures gave the shares a plus of around 13 percent. Analyst Johannes von der Ohe from Bank Oddo BHF attested the fuel cell manufacturer a respectable first half of the year with a second quarter that exceeded its expectations in terms of both sales and operating profit. Driven by the strong order development and price increases, SFC has found an answer to the prevailing inflationary pressure.
Here you can go to the page with the Dax course, here you can find the current tops & flops in the Dax.