Dax still in downtrend despite yesterday’s rally

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.

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. According to Martin Utschneider from the private bank Donner & Reuschel, 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, however, the situation in the leading German index has calmed down considerably. And as long as the stock market barometer is above around 13,110 points, little is likely to change. According to Utschneider, a floor could now form in the area 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 reveals an interesting trend. 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”. An important note: The survey took place on Tuesday of this week, the rally on Wednesday could not be taken into account.

The behavior of the professionals for the market but rather burdensome. 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 evening, the European single currency cost 1.1009 US dollars. That was about a cent less than in early trading.

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.

Movement in bond yields

The prospect of less support from the central bank put the bonds of southern euro countries under pressure in particular. In contrast to the falling prices, yields and yield spreads rose sharply compared to German government bonds.

The risk premium of ten-year Italian government bonds increased by more than 0.2 percentage points. The risk premiums last rose so significantly in April 2020. For ten-year Spanish and Portuguese bonds, the yield spread increased by 0.12 percentage points each.

Yields, however, were just under 1.9 percent in Italy, just under 1.3 percent in Spain and 1.2 percent in Portugal, still slightly below the levels at the beginning of the month. However, the fluctuations in the bonds of countries that are comparatively highly indebted and are therefore considered riskier are increasing.

The yield on the ten-year German government bond, which is considered the linchpin for the development of long-term capital market interest rates in the euro area, rose by 0.05 percentage points to 0.26 percent. In the course of Russia’s war of aggression against Ukraine, the yield slipped back into the red at the beginning of the month.

Sandrine Perret, economist and bond strategist at Vontobel, described the ECB’s approach as “negative”, especially for the peripheral euro countries. Wolfgang Bauer, bond fund manager at M&G Investments, takes a similar view: “If the ECB accelerates the reduction in bond purchases, investors could soon find themselves in a new market environment in which central banks no longer offer a safety net.” This does not only apply to the bond markets, but also for the stock markets. So far, the flood of money from the central banks has also been a major support for stocks.

Oil prices are rising again

After the recent slide, oil prices stabilized 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. By the evening, most of the winnings were gone. On Wednesday, speculation about an increase in oil production in the United Arab Emirates fueled hopes that the supply bottleneck would ease.

In terms of individual values, car shares, among others, came under pressure. Despite a higher profit last year, BMW slipped by 5.5 percent to 72 euros. Investors had already expected a good result, a trader justified the price slide. In the leading index, VW and Continental lost more than four percent, Mercedes-Benz a little less.

Look at the individual values

Hanover Re: The papers expanded their losses and closed 5.7 percent lower. 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 gave the share an increase of almost eleven 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. The stock falls but fell more than seven percent. Citigroup analyst Thomas Chauvet criticized the lower-than-market dividend proposal.

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