Dusseldorf Interest rate worries also weighed on the German stock market in the middle of the week. In the first few minutes of trading, the Dax fell by 0.31 percent to 15,350 points. The leading German index thus followed weak targets from the USA and Asia, but escaped the drama there.
Despite the slight downward trend, the Dax is still in a sideways movement with a trading range of 400 points: On the upside, the high for the year on February 9 at 15,659 points has established itself as resistance.
On the underside, the level between 15,250 and 15,275 points has already proven to be support several times. The daily lows of February 6th, 7th and 10th are in this area.
At the start of trading, what capital market expert Thomas Altmann suspected turned out to be correct: “It could be trading day number 15 in the 400-point wide trading range.” In view of the widespread expectation of interest rates rising again, maintaining the current trading range would be a success for the Dax to rate.
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So far, the leading German index has escaped a more massive downward trend. “Bargain hunters are still regularly trying to protect the German share index from the negative pull effect from New York,” explain the market experts at CMC Markets.
In their opinion, only a slide below 15,240 points at the close of trading would activate a trend reversal. So if the buyers pull back, there is a risk of a stronger correction. Equally, their current resilience holds the chance of a continuation of the rally towards all-time highs as the uptrend remains intact.
Awaiting Fed Minutes
The majority of investors in the US expect that the forthcoming publication of the minutes of the most recent US Federal Reserve meeting, the Fed, will point to a further tightening of US monetary policy. As a result, Wall Street suffered its biggest losses since December.
“The market fears that central banks will need to raise interest rates much more to contain inflation,” said JPMorgan’s Kerry Craig. The Fed could consider larger rate hikes again. James Bullard, head of the regional Fed in St. Louis, signaled this last week.
Renewed signs of impending interest rate hikes are likely to further depress market sentiment. For German investors, the question arises as to how long the Dax can escape this pessimistic mood.
In focus today: Ifo business climate Germany
The current Ifo business climate index is expected for Wednesday, the specifications for the index for the current month were quite mixed: while the ZEW balances, like the Sentix investor confidence, were able to increase, the preliminary purchasing manager indices on Tuesday were partly disappointing. This also includes the purchasing managers’ index for the manufacturing sector, which unexpectedly fell further, while its counterpart for the service sector continued to rise.
The capital market experts at Helaba are assuming that the Ifo business climate index will rise again slightly. “It would be the fifth plus in a row and yet the level of the company barometer will probably remain low,” they predict.
Experts polled by Reuters expect that the mood in the executive floors of the German economy has brightened. The barometer could therefore rise to 91.4 points from 90.2 points. Economists polled by Bloomberg are also assuming an increase now that a serious gas crisis seems to have been finally averted.
Too much optimism?
Despite these positive signs, there are warning voices. Commerzbank expert Christoph Weil warned against too much optimism on Tuesday, referring to a flagging industry in the survey of European purchasing managers.
The high order backlog from the pandemic times is melting away and demand is suffering. In Germany, for example, there was a big drop in new export business.
The Bundesbank doesn’t exactly exude confidence in its current monthly report either. In contrast to the EU Commission, she continues to expect that German economic output will decline slightly this year.
Look at the individual values
Fresenius and FMC: Fresenius boss Michael Sen is planning the liberation because of the ongoing problems at the dialysis subsidiary FMC. By the end of the year, FMC is to be converted into a stock corporation (AG). In the past, the group’s earnings before interest and taxes (EBIT) shrank by a tenth to 4.0 billion. The plans gave the FMC shares a boost: they increased by around five percent at the start of trading on Wednesday and are therefore the biggest winner in the Dax, while Fresenius is the biggest Dax loser with a minus of almost five percent.
Telefonica Germany: A consistently high influx of customers gives the company a surprisingly strong financial result. In the past year, sales increased by 5.9 percent to 8.22 billion euros. Growth drivers are the proceeds from hardware sales, which have increased by almost 14 percent. At the start of the stock exchange, the share price falls slightly to over EUR 2.80.
Danone: The French food company felt the inflationary pressure in 2022. While like-for-like sales rose by 7.8 percent and thus reached the upper end of the forecast range, the operating return on sales shrank to 12.2 percent from 13.7 percent in the previous year, as the group announced on Wednesday. At the start of the stock exchange, the price rose by more than one percent to over 53 euros.
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