Dusseldorf After jumping by more than 1000 points on yesterday’s trading day, investors on the German stock market are immediately taking profits again. Shortly before the close of trading, the Dax was trading at 13,543 points on Thursday, a drop of 2.8 percent or the equivalent of almost 400 points.
Today’s trading confirms the thesis that Wednesday’s gains were just a bear market rally, a countermove in an intact downtrend. Martin Utschneider, technical analyst at private bank Donner & Reuschel, saw it this way even before the start of trading: “Yesterday’s ‘buying panic’ can quickly turn into the opposite.”
For classification: Since the beginning of the year, the Dax has slipped from 16,285 points to 12,438 points. Only with a level of around 14,360 points would these losses have been halved. According to the technical analysis, that would be a “normal countermovement”, which would not change anything about the intact downward trend.
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This bear market rally would only be over with sustained listings above 14,800 points, the “maximum countermovement” overcome and the leading index would switch to a new positive stock market phase. In the opinion of Utschneider, the Dax would even have to reach the mark of almost 15,000 points.
Long-term investors also pay attention to the 200-day line, which must first be overcome for a long-term uptrend. This average line is currently at 15,528 points and is falling by around seven points every day.
Overall, the situation in the leading German index has calmed down significantly after yesterday’s trading day. And as long as the stock market barometer is above around 13,110 points, little is likely to change. A floor could now form for Utschneider in the range of 13,095 to 13,025 points.
According to Wikipedia, Wednesday’s session ranks seventh among the days with the highest price gains with a plus of 7.9 percent or 1016 points. October 13, 2008 is the undisputed leader with an increase in value of 11.40 percent. At that time there was speculation about the announcement of a comprehensive rescue package during the financial crisis. This underlines the stock exchange rule that high profits are not achieved when the facts are on the table, but in advance (“buy the rumor, sell the news”).
Local professionals had bet on rising courses
The Frankfurt Stock Exchange survey of medium-term oriented institutional and private investors is interesting. For classification: The survey took place on Tuesday of this week, the rally on Wednesday could not be taken into account.
The conclusion: While private investors have only watched the price turbulence since Wednesday of last week, the fear of missing out on a rally was greater among professionals than the fear of further price losses. You entered the market before Wednesday and were then rewarded with an increase of more than 1000 Dax points. For the behavioral economist Joachim Goldberg, who evaluates the survey, this price increase was “homemade”.
Robert Halver: “The live ticker is now particularly important”
But this behavior is now more of a burden for the market. Because many local professionals are already invested, the number of potential new buyers has shrunk significantly. Given the still unclear geopolitical situation surrounding the war in Ukraine, Goldberg believes that only a few international asset managers are likely to enter the European market. “Let’s hope that in the event of another Dax setback, the remaining possible demand from investors will be sufficient to prevent worse things from happening,” he says.
Euro briefly benefits from ECB decisions
The euro briefly benefited from the ECB’s decisions on Thursday. Most recently, it fell back below the $1.10 mark. In the afternoon, the European single currency cost 1.0980 US dollars. That was about a cent less than in early trading. The ECB set the reference rate at 1.1084 (Wednesday: 1.0993) dollars. The dollar thus cost 0.9022 (0.9097) euros.
Despite new risks for the economy, the ECB is heading towards an end to its ultra-loose monetary policy. It is reducing its billion-dollar bond purchases earlier than planned and is planning to end them in the summer. The statements initially spurred the euro and drove it up to 1.1121 dollars. In view of the new uncertainties for the economy caused by the Ukraine conflict, a number of economists had actually expected the ECB to wait and see.
However, the euro quickly gave back gains and came under pressure. After all, ECB President Christine Lagarde has left it open when the central bank will raise interest rates. In view of the high level of uncertainty, the central bank wants to keep as many options open as possible.
Oil prices are rising again
After the recent slide, the oil price is on the up again on Thursday. The North Sea variety Brent rose in price by almost four percent to $115.35 per barrel. The US oil WTI cost $111.76 per barrel at times 2.8 percent more.
On Wednesday, speculation about an increase in oil production in the United Arab Emirates fueled hopes that the supply bottleneck would ease. Brent and WTI prices each slipped a good 17 percent. At the start of the week, prices had jumped to their highest levels since July 2008, with Brent trading at $139.13
In the case of individual values, car shares in particular got under the wheels. Despite a higher profit last year, BMW slipped by up to 7.8 percent to 70.22 euros. Investors had already expected a good result, a trader justified the price slide. In the leading index, Mercedes Benz, Volkswagen and Continental were each over four percent weaker.
Look at the individual values
Hanover Re: The papers lose 2.7 percent. After a jump in profits in the second Corona year, the reinsurer wants to increase the dividend sharply to a total of EUR 5.75 per share. However, the special dividend contained therein is lower than hoped for, the Jefferies analysts complained.
K+S: Despite the war in Ukraine and the associated uncertainty for the agricultural markets, the salt and fertilizer manufacturer is confirming its annual targets. In addition, following the sale of its American salt business, K+S is also considering a divestment from its other salt activities. This gives the share a plus of 7.9 percent.
Hugo Boss: The fashion group wants to finally tick off the corona pandemic and is aiming for record sales and profit increases this year. For 2021, shareholders are to receive an increased dividend of EUR 0.70 (previous year: EUR 0.04) per share. However, the stock fell by 6.6 percent. Citigroup analyst Thomas Chauvet criticized the lower-than-market dividend proposal.
Linden: The stock trades at a dividend discount today, Thursday. 4.21 euros are paid, the closing price on Wednesday was 265 euros. The paper is currently listed at EUR 259.70.
Here you can go to the page with the Dax course, here you can find the current tops & flops in the Dax.