A market phase characterized by great uncertainty.
(Photo: dpa)
Dusseldorf There is absolute panic in the markets at the moment. The opportunities and risks are no longer in the foreground, but only the events surrounding the war in Ukraine. Investors are currently reacting to an intensification of the conflict with panic selling.
The main question is: What consequences can this war have? The effects are becoming increasingly incalculable – also from an investor’s point of view.
The current data from the Handelsblatt survey Dax-Sentiment also shows a rare panic among investors. The survey only takes into account the price development up to last Friday. This does not yet account for Monday’s sharp fall again due to talks about a Russian oil embargo and sudden gains in the afternoon.
After evaluating the new survey and other indicators, sentiment expert Stephan Heibel at least points to a positive outlook. “Just a calming down of the situation in Ukraine or at least a few days without further deterioration would be enough to end the panic selling,” he said. “And an end to the panic selling would immediately lead to a countermovement on the stock markets.”
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The current mood is now similar to the stock market times during the Corona crash. The current short-term investor sentiment at minus 7.8 is not far from the lowest level of the corona crisis at the beginning of 2020. Only on February 29, 2020, at minus 8.2, has a lower value ever been reached since the survey began in 2014.
The mood of panic is also reflected in the strong uncertainty. This is currently at minus 8.6. Regardless of current prices, stocks are thrown onto the market.
However, a comparison with the sentiment indicators during the Corona crash gives some hope. On March 16, 2020, two weeks after the great mood of panic, the Dax slipped to its lowest level since the crash began in February. This bottoming out then lasted for four more trading days, after which prices rose again significantly.
The five-week sentiment has also reached an extremely negative value at minus 25, which signals a bottom formation. To compare with the development during the Corona crash: This rather sluggish average did not reach its previous record low until the end of March at minus 32, i.e. two weeks after the lowest Corona score. On said March 16, the five-week sentiment was minus 17.8.
Euphoria on the commodity markets
Sentiment has reached record levels in both the gold and oil markets. The rally on the commodity markets leads to euphoria among investors. Gold is in demand as a safe haven asset in times of crisis, while oil prices are being driven by fears of supply shortages.
At the same time, future expectations remain cautious. The following applies to both markets: the rally can certainly continue a little longer. However, without new drivers, commodity prices are more likely to consolidate soon. They are the opposite of the current stock market development.
More about the markets in the Ukraine war:
Current survey data
The future expectation fell only slightly to a value of plus 2.9 from 3.7 in the previous week. Optimism still dominates, but there are doubts as to whether the stock markets in the world of tomorrow really offer such good prospects. Accordingly, the willingness to invest has also fallen from plus 5.0 in the previous week to just plus 3.4.
The Euwax sentiment of the Stuttgart Stock Exchange is plus three and indicates a slight excess of call versus put leverage products on the Dax in the depots of private investors. The logic behind it: It is obviously too late for many private investors to hedge, and the first are already speculating that prices will rise again.
The put-call ratio on the Frankfurt futures exchange, Eurex, where institutional investors in particular trade, shows a value of 1.4 that the professionals are resolving the high hedging purchases of the previous weeks. The put-call ratio on the Chicago Stock Exchange CBOE also shows a decline in US investors’ propensity to hedge.
US fund managers, on the other hand, have reduced their investment ratio to 30 percent. It is the lowest investment rate since the Corona crash. The bull-bear ratio of US private investors is minus eleven percent. The bear dominance has eased off a bit compared to the previous week.
The US markets “fear and greed indicator” calculated using technical market data is trading at 17 percent, signaling extreme anxiety. Other short-term technical indicators also show an oversold market. From a technical point of view, however, a countermovement is overdue.
There are two assumptions behind surveys such as the Dax sentiment with more than 6500 participants: If many investors are optimistic, they have already invested. Then only a few are left who could still buy and thus drive prices up. Conversely, if investors are pessimistic, the majority of them have not invested. Then only a few can sell and thus depress the courses.
Do you want to take part in the survey? Then let yourself be automatically informed about the start of the sentiment survey and register for the Dax sentiment newsletter. The survey starts every Friday morning and ends on Sunday afternoon.
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