Dusseldorf At the start of the week, the leading German index is taking a breather. After significant gains at lunchtime, the Dax was again unchanged at 13,479 points in the wake of weak US stock markets in the afternoon. Today’s daily high of 13,570 points is the highest in six weeks.
However, there are increasing signs that the rally that has driven the Dax since its low of 12,390 points is still continuing. Because in the past few weeks there has been little good news that could have created a buying mood. What sounds contradictory at first glance can be explained on the basis of investor behavior.
In most cases, positive news about inflation, the Ukraine war or global supply chain problems ensure that long-term investors get back on board. This ensures that prices continue to rise.
Why has the Dax climbed more than 1100 points in just four weeks? Because new bad news was missing, there were hardly any sellers. There were also few really positive surprises, but there were many reports that were not as bad as feared. That was enough for an upward movement.
For the sentiment expert Stephan Heibel it would be “not atypical if the stock markets continue to recover step by step from now on, interrupted by various breather breaks in which the known problems come to the fore again”.
One of the problems has recently worsened: the weak Chinese purchasing manager indices initially slowed down the recovery on the stock market today.
The official purchasing managers’ index for the manufacturing sector in July surprisingly slipped back into contraction territory at 49 points. This was the fourth under-50 result in the past five months.
Values above 50 indicate a growing economy, below 50 a shrinking economy. The consensus forecast from business news service Bloomberg had expected 50.3, compared to the June reading of 50.2.
The Caixin Purchasing Managers’ Index for private sector manufacturing was also significantly weaker than expected at 50.4 from 51.7 previously. The Caixin tracks smaller private companies, so Commerzbank FX analyst Charlie Lay believes the weak read highlights the strains the economy is currently facing.
If China’s economy slows, the whole world will frown. The combination of the zero-Covid strategy and the ongoing real estate crisis is depressing the mood in China.
According to technical analysis, Dax has further price potential
In a technical analysis, last Friday’s surpassing of 13,400 points confirmed the upward trend. According to Jörg Scherer, technical analyst at HSBC Germany, this results in further price potential of 1000 points.
The leading German index had “worked off” this mark for seven trading days before it finally managed to jump over it. Accordingly, this area is now the first support mark.
On Friday there was still an upward price gap, a quasi-revaluation of the market. This upward price gap arose because Friday’s lowest price of 13,341 points was well above Thursday’s highest price of 13,289 points.
In order not to jeopardize the recent steep template, the German standard values should no longer close this price gap, says Scherer. “Therefore, the mark of 13,289 points offers itself as a safeguard on the underside.”
Look at individual values
Varta: The company is bracing for a slump in profits and flat sales this year. Adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) are expected to shrink by up to 29 percent. The stock slipped by more than 13 percent at the top. The loss in value is currently 5.7 percent.
Hedge funds, which had massively bet on falling prices for the battery manufacturer in the past few weeks, should be happy about this price slump. At Varta, the short rate was extremely high at over 25 percent and was only marginalsignificantly below the value of 25.87 percent that the analysis house S3 for the real estate group Eagle Group reported when he slid into the crisis.
The turnover on Wednesday is very high with over 478,000 traded shares up to 3.30 p.m. Last Friday, this figure was a total of 223,331 shares, with values below 100,000 shares per trading day being common. Sales of 14,825 and 11,239 shares, each settled at one price, are also unusually high for such a stock.
The high trading volume suggests that some short sellers are cashing in at the start of the week. Because hedge funds use so-called short sales for their short bets.
You can either bet directly on falling prices or hedge against price risks. To do this, hedge funds borrow shares for a fee and sell them immediately in the expectation that they can buy the shares back at a lower price before the return date. The difference between the sell and buy price is your profit.
The stock has fallen more than 40 percent since the beginning of the year. Most recently, she came under pressure when it became known that the Austrian investor Michael Tojner had sold Varta shares worth 22.5 million euros in the falling market.
Covestro: The US bank JP Morgan lowered the price target for Covestro from 48 to 40 euros and left the rating at “neutral”. Following the repeated profit warning from the plastics group, the middle of the target range for the operating result (Ebitda) is now 16 percent below the consensus estimate and four percent below its recently lowered forecast. After an opening loss of five percent, the share is still down 1.3 percent. Analyst Markus Mayer from Baader Helvea Bank warned that Covestro’s preliminary quarterly results were better than expected.
stabilizer: The company continued to accelerate revenue and earnings growth in the third quarter after an already strong second quarter. The shares of the auto supplier rise by 2.9 percent.
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