Dusseldorf On Friday, after a high for the year, there was renewed profit-taking on the Dax: with the daily high of 15,919.5 points, the leading German index overdid the previous year’s high of 15,919.1 points set on Monday in the morning, but was initially unable to maintain the level. In the morning it was down 0.4 percent at 15,735 points.
This repeats a phenomenon that has recently been observed several times: After new highs, there is a lack of follow-up purchases. In two of the three most recent cases, the Dax ended the trading day in the red – a sign of the currently prevailing skepticism.
This is reinforced by the latest economic figures for Germany. The gross domestic product (GDP) stagnated from January to March compared to the previous quarter, as the Federal Statistical Office announced on Friday. Economists surveyed by the Reuters news agency had expected an increase of 0.2 percent, after a revised minus of 0.5 (previously: -0.4) percent in the fourth quarter.
This optimistic assessment was already priced into the prices, which is why the disappointing numbers are depressing the mood. Economist Ralf Runde from the Landesbank Hessen-Thüringen (Helaba) explains: “The German economy disappoints the consensus estimate, but can avoid a recession and has stagnated after the weak fourth quarter of 2022, as we expected.”
Since France, Italy and Spain published good growth figures on balance today, the European Central Bank should nevertheless feel encouraged not to declare the interest rate cycle over yet. “An interest rate hike of 25 basis points is to be expected next week and further tightening should also be taken into account, especially since inflation rates are still far too high and in some cases even rose in April.”
Fresh data on German inflation figures will come in the afternoon (2 p.m.). A slight decline is expected. However, Altmann explains: “Today’s inflation rate will probably show once again how slow and tough the decline is. Any negative surprise would further increase the pressure on the ECB.”
The mood in the USA, on the other hand, is proving to be supportive for the Dax. There, the market-wide S&P 500 index rose by almost two percent on Thursday due to the surprisingly good reporting season. This is also driving German stocks, explains portfolio manager Thomas Altmann from asset manager QC Partners: “The specifications from the USA are so good that they cannot be ignored.”
Range of 15,700 points is important
The stock market wisdom “Sell in May and go away” could turn out to be a trap for investors, says Martin Utschneider, analyst at the private bank Donner & Reuschel: “The Dax seems to want to ‘dance’ much more into May.”
April marks the end of the historically best month on the stock market, and the stock market begins to tend to be weaker. However, according to Utschneider, various technical indicators suggest that the upward trend could continue this year.
Among other things, there was great buying interest on both Wednesday and Thursday, when the Dax fell towards 15,700 points. This is a sign of strength. However, should the Dax fall below this important mark for a long time, there would be a further downward potential of 200 points, warns analyst Jörg Scherer from HSBC Germany.
Yen under pressure
After the interest rate decision by the Japanese central bank (BOJ), the national currency, the yen, is going downhill. The dollar, on the other hand, rose 0.7 percent to 134.94 yen.
The Japanese central bank stuck to its ultra-loose monetary policy at the first interest rate meeting under its new governor Kazuo Ueda. The currency guardians decided at their meeting that they wanted to subject monetary policy to a broad-based review, but they wanted to take a year and a half to do it.
Commerzbank analyst Ulrich Leuchtmann therefore comments: “This statement should have shaken the hopes of those (including me) who had hoped that at least a slow, gradual turn towards normalization of monetary policy could take place, if not a U-turn immediately with Kazuo Ueda taking office.”
Individual values at a glance
Mercedes Benz: The carmaker increased its consolidated profit by twelve percent to four billion euros – and thus even more than the already announced operating result. After a positive start, the share of the sixth largest Dax value turns negative and loses around 1.5 percent.
Covestro: For the plastics group Covestro, the year could be easier than initially feared. For 2023, Covestro now expects, at best, an operating profit (Ebitda) at the previous year’s level of EUR 1.6 billion or a decline to EUR 1.1 billion. So far, the Leverkusen-based company had forecast earnings well below the previous year’s figure.
The current share buyback program, which was put on hold in the middle of last year due to the gloomy economic prospects, is also to be resumed in the short term. The stock benefits from the news and is up more than five percent.
ProSiebenSat1: The MDax group had already announced a massive dividend cut and a drop in profit and sales on Thursday evening. In addition, ProSiebenSat.1 is parting ways with CFO Ralf Gierig with immediate effect and by mutual agreement. The stock fell more than 10 percent.
hellofresh: The US bank JP Morgan has increased its price target for the recipe box mailer from 27 to 31 euros. The shares of the MDax group rose by almost three percent to over 26 euros.
Software AG: Shares in the software company rose by around 1.5 percent in the SDax small-cap index. The Bloomberg news agency reports that activist investor Elliott at the
Software AG has joined. The Darmstadt-based company, which is in the middle of restructuring, is about to be taken over by the US financial investor Silver for 2.2 billion euros
Lake.
Varta: The ailing battery manufacturer cuts its forecast again. Sales will now be between 820 and 870 million euros, the SDax company announced on Friday. So far, Varta had assumed 850 to 880 million euros. The stock falls 8 percent.
High Low: At the construction group, the US bank Jefferies increased its price target from 67 to 70 euros. The share, which is listed in the SDax, still loses around one percent to a good 71 euros.
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