Dusseldorf Everything on the German stock market is now revolving around a new record high. Will the Dax already set a new record this trading week, i.e. prices above 16,290 meters?
The prerequisites for this are good. At lunchtime, the stock market barometer stood at 16,171 points, an increase of 0.9 percent. With the daily high of 16,178 digits, the record was only around 110 points away. At the start of the year, the Dax had already risen by around 180 points on Monday compared to the final level in 2021, and ultimately went out of trading with an increase of 0.9 percent and a final reading of 16,020 points.
From a technical point of view, there is no major resistance on the way to the record high. Short-term investors can use the upward price gap that was torn on yesterday’s trading day as a hedge. This is a sign of strength.
Top jobs of the day
Find the best jobs now and
be notified by email.
Such gaps arise when there was no quotation in one area on two consecutive trading days. In the specific case, the highest point at the end of the year was 15,890 points, the daily low at the beginning of the year marked 15,943 digits. The gap would be closed at a price of 15,890 points. Below this, the 200-day line, which is important for long-term investors and currently has 15,544 meters, acts as further support.
Bold optimists naturally hope that a completely different stock market wisdom will come true: As is the case for the first five days, for the entire trading year, this is the rule. But investors shouldn’t rely on that, even if this wisdom was confirmed last year.
Today’s price rise is supported by good data from China. In the Middle Kingdom, the Caixin purchasing managers’ index climbed from 49.9 to 50.9 points in December compared to the previous month, the highest level since June of last year. Values over 50 indicate economic growth.
According to Thomas Altmann from the investment house QC Partners, China is not experiencing a boom at the moment. “But China is just as far away from a catastrophe in the sense of an economic slump,” says the capital market expert.
With a new record high this trading week, the Dax chart would take almost exactly the same course as at the turn of the year 2020/21. Back then, too, the leading index slipped in mid-December due to the large expiry date on the futures markets, but then set a new high on January 8, 2021.
In addition, the price gains since the beginning of the year are a confirmation of the so-called January effect. Last December, investors sold poorly performing stocks to offset losses against profits for tax reasons, and reinvest this freed up capital in January.
Investors should only deal with the fact that the price gains in the first weeks of January are usually followed by a setback at the end of the month.
Is there a turnaround in interest rates on the bond market?
An important brand is once again in focus on the bond market. The ten-year Bunds have zero again in their sights. On December 21 of last year, the value for a ten-year federal bond was minus 0.360 percent. Today, Tuesday, a value of minus 0.117 percent was achieved, currently it is minus 0.133 percent. The exciting question: Will there be a sustainable turnaround towards positive interest rates this year?
Apparently, the majority of investors are expecting an initial rate hike this year – in contrast to the public statements made by the ECB. So investors sell bonds, prices fall accordingly and yields rise. Which of course leads to the question: What happens if the central bankers rule out a rate hike again? Capital market expert Thomas Altmann then believes a quick turnaround in the bond market is possible.
The explanation: The rise in yields was not, as is usually the case, caused by a boost in inflation expectations. This is why the analysts at Landesbank Helaba write in their morning commentary this morning: “Obviously, the players are relying on a sustained economic recovery and a slow but sustainable turnaround in monetary policy.” This is supported by the fact that the yield difference between the Bund and has not significantly changed the government bonds of southern European countries.
“The next few days will have to show whether the majority of investors actually come to similar assessments as those who contributed to a sell-off of European government bonds in the thin holiday trade,” write the Helaba analysts.
According to a technical chart analysis, the so-called bottoming out of the ten-year Bund was heralded in May 2019. Should the return rise above the previous highs of minus 0.17 percent and 0.06 percent in this period, this process would be completed. In the opinion of Jörg Scherer, technical analyst at HSBC Germany, the return should then increase in the range between 0.15 and 0.19 percent. “The imputed minimum price target from the lower reversal can even be estimated at around 0.60 percent,” Scherer calculates.
Look at individual values
The focus of today’s trading day is primarily on the stocks of vaccine manufacturers, all of which are falling significantly and have thus strengthened their tendency since the beginning of December. The slide is greatest for Valneva shares, which have fallen by 18 percent. Reason for the crash: The contagious Omicron variant, which is more contagious but arguably less deadly than its predecessor, could lead to herd immunity, thus making the Valvena vaccine obsolete before it hits the market.
Valneva’s vaccine is based on what is known as a dead vaccine, an older technique than the currently available messenger RNA and vector vaccines. This vaccine was primarily intended to reach those groups of the population who believe in traditional manufacturing processes.
In the course of these expectations that the pandemic will largely end in 2022, the paper of the German vaccine manufacturer Biontech gives way on the German stock market by 3.7 percent. The US vaccine manufacturer’s share price also fell 3.7 percent on the German trading platform Xetra.
Since the beginning of December last year, the prices of these vaccine manufacturers have fallen by more than 30 percent. A clear indication that the market expects the pandemic to end soon due to the Omikron variant.
The effects of rising interest rates can also be seen on the German stock market. The industry rotation away from technology towards cyclical industrials continues. After all, these cyclicals in particular benefit from an economic recovery, while the riskier growth stocks are then less attractive.
The Daimler share leads the Dax winners list with an increase of 4.5 percent, followed by the Porsche stocks with an increase of 3.4 percent and the VW share with an increase of 2.4 percent. The mining company K + S is also ahead in the MDax small-cap index. In addition: Aviation values remain in demand as on the previous day. Lufthansa is increasing by 3.7 and Fraport by 3.5 percent. It is also hoped that Omikron will not affect international travel too much.
On the losing side are the values of the food delivery service Delivery Hero (minus 5.6 percent), those of the cooker box mail order company Hellofresh (minus three percent) and the online fashion retailer Zalando with a loss of 2.4 percent.
BASF: The Ludwigshafen-based chemical company wants to return three billion euros to the shareholders through a share buyback. The announcement is rewarded on the stock market with a plus of 2.6 percent. The buyback campaign is scheduled to start in January and run until the end of 2023. At the share price on Tuesday, the volume corresponds to a good five percent of the share capital. The dividend should not suffer from the share buyback. The group last bought back its own shares between 1999 and 2008.
Grenke: The Grenke share is one of the favorites on the German stock market with a price increase of 3.8 percent. The leasing company’s new business was reportedly at $ 1.7 billion in 2021 at the upper end of the company’s targets. However, these had previously been reduced, said a stockbroker.
Here you go to the page with the Dax course, here you can find the current tops & flops in the Dax.