Dusseldorf Since the US Federal Reserve delivers an interest rate decision according to the wishes of stockbrokers. In addition to the expected interest rate hike of 75 basis points, the monetary watchdogs indicate the chance of a slower rate of tightening. There could be a smaller increase as early as the next interest rate meeting in December.
And what are the stock and bond markets doing? The listings are still slipping. Of the dax loses 1.2 percent in the afternoon and is trading at 13,097 points, down 160 points.
Prices are also falling on the bond market and yields are rising accordingly. The value of a ten-year US government bond was just under four percent shortly before the interest rate decision, but is currently back at 4.16 percent. The previous multi-year high is 4.31 percent. The yield on a ten-year federal bond is also back at 2.23 percent after 2.10 percent the day before.
Capital market expert Thomas Altmann from the investment house QC explains these losses: “Now the fear that interest rates will rise more slowly, but longer and higher than before prevails.” As a result of the Fed’s statements, market expectations of the key interest rate at the end of 2023 jumped by 15 basis points.
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For experienced stockbrokers, the development is by no means surprising. There has been no profit-taking on the stock market in recent weeks, although the Dax has risen by almost 1,600 points since the end of September. But now the starting signal for a consolidation should have been given, also because the leading index is overbought because it rose too high too quickly.
However, experienced stockbrokers also know that such consolidations are very difficult to trade. Especially when investor sentiment speaks against another crash or a correction that would be achieved from a minus of ten percent or the equivalent of 12,100 points.
According to the results of the Handelsblatt survey Dax-Sentiment, many private investors have not yet been able to benefit from the current rally, so they are waiting for an entry. “It is still completely open whether the Fed ended the Christmas rally early or whether the Christmas rally is just pausing,” says Altmann. Because if you invest too late, you have to chase the rising prices.
According to the behavioral economist Joachim Goldberg, the current survey results from the Frankfurt Stock Exchange “still do not pose a threat to the Dax”. The mood of domestic investors is currently also likely to reflect the development of long-term capital flows. Because they were primarily responsible for the rally, which can be seen from the parallel rise in the euro exchange rate.
Scenario one: The small consolidation
But how can this consolidation work? The positive scenario would be: The Dax remains above the 13,000 point mark. The 100-day line is also there at 12,980 points. This leaves the chance for a quick resumption of the rally. Because such a short setback would put many investors under pressure to buy. The rally would then pick up speed again with prices above 13,400 points.
This scenario is possible, but not the most likely. The time frame speaks against it. There is a good chance that the ongoing consolidation will take two weeks before a decision on future direction is made.
Because in two weeks is the expiry day on the futures markets, like every third Friday of a stock market month. Then options on the Dax and on individual shares are settled. A look at the past three stock market months shows the enormous importance of the futures market for the further development of the Dax.
In August and September, the leading index slipped 1000 points after the expiry date by the end of the month, but in October it had risen by 1000 points by the end of the month.
Scenario Two: The Greater Consolidation
The more likely scenario would be a dip back into the 12,600 to 12,800 range. Among other things, this is where the 50-day line currently stands at 12,738 points. This mark was already significant during the rally. It took a few days for the Dax to break through this mark.
Financial expert Halver: “The US Federal Reserve is sending conflicting signals”
In addition, according to technical analysis, 12,653 points is the normal correction of the rally since the end of September, which extends from 11,682 points on the downside to 13,444 points. Normal correction means a fall from the peak by 50 percent of the previous rise.
Only with listings below 12,400 points would there be a risk of a return to the previous year’s low, which is also unlikely given the high level of willingness among domestic investors to buy.
Look at the individual values
Automobile Values: On the other hand, there were larger losses in the auto sector, among other things because of bmw. The titles of the car manufacturer lose 5.6 percent according to numbers and are Dax tail light. The confirmed annual targets were not convincing: According to RBC analyst Tom Narayan, many investors had hoped for a higher outlook. The haircuts at VW and Continental range from three percent to 5.2 percent.
Real estate values: The industry remains under pressure because high interest rates are affecting its market environment and increasing financing costs. With Patrizia and Dic Asset, two companies lowered their profit forecasts. The courses of the two SDax values then slipped by 4.4 and 2.4 percent.
Thyssen Krupp: Shares plummet after negative analyst comment. The papers fall by 11.4 percent to 4.47 euros after the Deutsche Bank lowered their rating to Hold from Buy. The reasons given by the analysts were the difficult macroeconomic environment and the overly complex corporate structure.
Zalando: At the online fashion retailer, investors don’t really know how to deal with the quarterly report: the course fluctuated between profits and losses. Most recently, the turn into plus succeeded again with three percent. Since the beginning of the year, however, the paper has lost around two-thirds of its value.
The number of active customers has increased by eight percent and has exceeded the 50 million mark for the first time. The introduction of the minimum order value has increased the order volume. Since customers pay a shipping fee for smaller orders, these are now also profitable.
Still judged Zalando future prospects cautious. “The consumer climate has reached a new low and inflation is still high,” said CFO Sandra Dembeck.
Hugo Boss: The fashion group has been able to score with its customers with its collections and is on record course despite inflation and the energy crisis. The board raised its targets for 2022. Boss is therefore on track to make 2022 a record year. The share slipped 3.7 percent, but was able to hold up bravely with a minus of around twelve percent since the beginning of the year.
Shop pharmacy: The shareholders of the online pharmacy were particularly badly hit in the SDax with a price slide of 13.4 percent. They suffered from another setback when introducing e-prescriptions in Germany. The Association of Statutory Health Insurance Physicians in the only pilot region, Westphalia-Lippe, is suspending the introduction of electronic prescriptions.
Here is the page with that Dax coursehere there are current tops & flops in the Dax.