Investors are unsettled – Dax starts with losses

Dusseldorf The hope for peace in the Ukraine war is far away. This also affects the German stock market. Today, Tuesday, the Dax falls in trading by almost two percent to 13,693 points. As recently as Monday, the leading index temporarily jumped above the 14,000 point mark before going out of trading with a price increase of 2.2 percent and 13,929 points.

Russia and Ukraine want to continue talks this Tuesday. In addition, the heads of government of Poland, the Czech Republic and Slovenia want to travel to Kyiv today for a meeting with the Ukrainian President Volodymyr Zelenskiy. The visit is intended to signal the European Union’s support for Ukraine.

Meanwhile, stockbrokers warn that the price recovery of the past few days could turn out to be a flash in the pan. Although Russia continues to negotiate a ceasefire, it continues to shell Ukrainian cities. At the same time, the country is threatening to repay its foreign exchange debt in rubles, which would mean a default.

Investors are also worried about the possibility of punitive measures against China if the government there supports Russia in circumventing western sanctions. In this case, the risk of a deep recession in the global economy would suddenly increase dramatically. In addition, the sharp increase in the number of corona infections in China made investors nervous.

In view of this overall situation, it is questionable whether the German share index will sustainably exceed the psychologically important 14,000 point mark in the near future. “Without further progress in negotiations, the 14,000 points could become a hard, if not an insurmountable, hurdle,” says Thomas Altmann, capital market expert at the investment house QC Partners.

Even prices above 14,000 points did not mean the end of the current downtrend, which has become more dynamic since Russia invaded Ukraine. According to chart technicians, they would only be another sign of stabilization. “A recognizable bottom formation was recently able to form at 13,095 to 13,025 points,” says Martin Utschneider, technical analyst at the securities firm Donner & Reuschel. The downward mode of the leading German index is intact, he adds. The Dax’s year-to-date low is 12,438 points.

Oil prices fall

The diplomatic efforts are at least providing some relief on the crude oil market. The price for the Brent variety from the North Sea was quoted at around 101 dollars per barrel (159 liters) on Tuesday – a minus of five percent. The price for the WTI variety also fell at times by around five percent to $97.40. This means that WTI crude oil “is trading for less than 100 US dollars for the first time in two weeks. But good news is not enough to push the Dax further up,” Altmann states.

Especially since the specifications from Asia are mostly negative: the Hang Seng Index in Hong Kong lost almost six percent at times and the Chinese CSI 300 index more than four percent. “The sell-off in China and Hong Kong just won’t let up,” says the expert from QC Partners.

Even stronger-than-expected growth in industrial production and rising retail sales could not stop sales there. Stock exchange events in the Middle Kingdom are currently being dominated almost exclusively by political developments. Economic data only played a secondary role. Technically, the Hang Seng Index is now the most oversold it has been since 1995, Altmann said.

In addition to efforts to reach a ceasefire, investors are also focusing on the interest rate turnaround expected from the US Federal Reserve. In view of the highest inflation in 40 years, investors are betting on the first increase for Wednesday after two years of low interest rates. The Fed is expected to hike interest rates by a quarter of a percentage point.

Look at individual values

RWE: The stock fell by almost 2 percent during trading. The energy group expects to be able to build on the operating result of 2021 in the current financial year. On Tuesday, RWE confirmed the forecast, which had been raised in mid-February. For the current year, RWE expects adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) at group level to be between 3.6 and 4.0 billion euros and adjusted net earnings of between 1.3 and 1.7 billion euros.

RWE boss Markus Krebber has warned against an immediate stop to energy imports from Russia. “Sanctions must be chosen in such a way that they can be enforced,” said Krebber. Suspending energy imports from Russia would currently have massive consequences due to the high level of dependency. “An immediate stop would have unforeseen consequences for the heat supply to households.”

In addition, a longer interruption in delivery could cause lasting damage to the production facilities of industry and medium-sized companies, added Krebber. RWE is one of the major customers of the Russian gas group Gazprom and has a long-term supply contract with it.

Volkswagen: The carmaker’s shares fell by more than one percent in trading on Tuesday, although Volkswagen increased its profits last year thanks to savings in the billions and higher vehicle prices thanks to successful renovations in some regions of the world.

In South America, where the car manufacturer had not gotten anywhere for years due to a failed model policy and burned a lot of money, the turnaround in earnings had been successful, Volkswagen announced on the occasion of its 2021 balance sheet presentation. In North America – i.e. the USA, Canada and Mexico – the main Volkswagen brand has returned to profitability after a few years.

In Europe, the electric car offensive is now paying off, and in its largest market in China, the group is still profitable and in a strong position with a market share of 16 percent.

Fraport: The Frankfurt airport operator’s papers have fallen by more than seven percent at times, although Fraport returned to profitability in 2021 thanks to some recovery in passenger traffic. Also because of crisis-related compensation payments, the bottom line was a surplus of almost 83 million euros after a loss of almost 658 million euros in the previous year, as the MDax-listed company announced in Frankfurt.

Wacker chemistry: Against the overall trend, the shares of the MDax title increased by more than four percent in the course of trading. After the record year 2021, the Munich-based specialty chemicals group Wacker Chemie will probably be slowed down this year by the sharp rise in energy and raw material costs. The family-owned company announced that earnings before interest, taxes, depreciation and amortization (Ebitda) would be between 1.2 and 1.5 (2021: 1.54) billion euros lower than in the previous year.

Sales, which jumped by 32 percent to 6.2 billion euros last year, are expected to continue to rise to around seven billion euros. Wacker CEO Christian Hartel calculates that electricity and raw materials will cost more than a billion euros, but most of these will be passed on to customers in the form of price increases.

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