Investors are unsettled – Dax starts with losses

Dusseldorf The Dax was able to largely make up for its losses on Tuesday and ended trading at 13,917 points, down almost 0.1 percent. This could also have been due to the good start to trading on Wall Street.

The leading index had previously fallen by up to 2.5 percent to 13,578 points. The still unclear situation in the Ukraine war had pushed prices down in the course of trading. With about 101 million shares traded during the day, turnover was the lowest in three weeks.

Stockbrokers warn against assessing the recent price recovery as too sustainable. 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.

The war in Ukraine has also caused stock market professionals’ confidence in the German economy to collapse more than ever before. The barometer for the assessment of the next six months fell by 93.6 to minus 39.3 points in March, as the Mannheim Center for European Economic Research (ZEW) announced on Tuesday in its monthly survey. This is the sharpest drop in expectations since the survey began in December 1991.

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 the 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 despite today’s temporary stabilization, 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 around $101 per barrel (159 liters) at the end of the Dax – a drop of six percent. The price for the WTI variety also fell at times by around six percent to $97. 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.

Wall Street opens higher

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.

The major indices Dow Jones, Nasdaq and S&P 500 each rose about 1.5 percent at the opening on Tuesday.

Look at individual values

RWE: The stock was up nearly 1 percent on Tuesday. 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. 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 ended trading on Tuesday about 0.6 percent up. In addition to savings in the billions and higher vehicle prices, Volkswagen also increased its profits last year 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.

Fraport: The papers of the Frankfurt airport operator fell by up to eleven percent at times, but subsequently limited the losses significantly and closed around three percent lower than the previous day. One dealer said the outlook for the current financial year fell short of expectations. Fraport returned to profitability in 2021 thanks to some recovery in passenger traffic. Due to the 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: The shares of the MDax title were able to gain around six percent against the overall trend by the end of the Dax. 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 one 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.