market report
The DAX started with slight gains after its historic high yesterday. But a look at the chart – and the calendar – warns you to be careful, because today is a big expiry day on the futures exchanges.
After its record high yesterday, the DAX is looking for direction at the end of the week. At the start of trading on
Attention, big expiry day in the DAX!
Today’s big expiry day calls for caution: On this day, investors close their long and short positions on the futures markets. This means that a market shakeout is taking place, which in the past has often paved the way for important turning points in the DAX.
“All in all – after the dynamic upward movement of more than 2,300 points within a few weeks – a breather is more likely. The expiry date has often provided the starting signal for this,” emphasizes Jörg Scherer, Head of Technical Analysis at HSBC.
The day before, the DAX had broken the 17,000 point mark for the first time in its history and extended the price rally that had been going on since October to a good 16 percent. The setback came in the afternoon in the person of ECB boss Christine Lagarde.
“After Jerome Powell, investors would also have been very happy to receive reassuring words from Christine Lagarde regarding an early interest rate turnaround,” emphasizes IG analyst Christian Henke. “But the head of the ECB remained adamant yesterday and clearly rejected calls for an interest rate cut.”
As a result, the DAX temporarily fell to 16,670 points – a loss of two percent from the daily and record high. At the close of trading there was a loss of 0.1 percent to 16,752 points. This reversal yesterday calls for caution: chart technicians speak of an “intraday reversal”. If prices first rise and then fall, this is usually a bad omen for the next trading day.
Wall Street investors too greedy?
The euphoria on Wall Street after the US Federal Reserve’s interest rate decision yesterday had also subsided significantly. According to analysts, the market has largely priced in the interest rate cuts promised by Fed Chairman Powell on Wednesday. The Dow Jones gained 0.4 percent yesterday to 37,248 points. The tech-heavy Nasdaq advanced 0.2 percent to 14,762 points, and the broad S&P 500 gained 0.3 percent to 4,720 points.
According to experts, the risk of a setback on the stock market has increased. One indicator of this is the “Fear & Greed Index” from CNN Business, which is about to enter the market state of “extreme greed”. “This means that there are increasing warning signs that Wall Street is overheating,” explains IG expert Henke.
At the end of the week there will be important economic data that has what it takes to influence the direction of prices. This morning, important leading indicators are on the agenda with the purchasing managers’ indices for Germany and the Eurozone. In the afternoon, the calendar in the USA is packed with the Empire State Index, industrial production, capacity utilization and the Purchasing Managers Index.
Investors on the Japanese stock market were in a buying mood at the end of the week. The Nikkei index advanced 0.9 percent to 32,970 points, the broader Topix gained 0.5 percent. The fact that the upward trend in the yen had lost some of its momentum provided some relief. In contrast, investors in China once again held back: the Shanghai stock exchange lost 0.6 percent, the index of the most important companies in Shanghai and Shenzhen fell 0.3 percent.
After its significant price jump yesterday, the euro is barely moving at the end of the week and is trading at $1.0988 in early trading. The day before, it had climbed more than one percent to a two-week high of $1.1008. The common currency benefited from statements by the ECB President. Christine Lagarde made it clear that the ECB would take more time to cut interest rates than is currently priced in on the market, according to a comment from Commerzbank. That should support the euro for now.
Meanwhile, the lower dollar rate is benefiting the price of gold: gold is becoming cheaper in the non-dollar area, which in turn increases demand for the yellow precious metal. After the Fed decision, gold was able to regain the much-noticed $2,000 mark. At the end of the week, 2,037 dollars per troy ounce were paid in early trading.
The weaker dollar is also driving up oil prices. In the morning, a barrel (159) liters of North Sea Brent costs $76.83, 0.3 percent more. Since crude oil is traded in the US currency, demand outside the dollar area often increases when the dollar falls. A looser monetary policy in the USA would also benefit the local economy and increase demand for oil, gasoline and diesel, oil investors hope.
Symrise shares are likely to be under pressure in the DAX today. The manufacturer of fragrances and flavors is feeling the effects of delayed inventory reduction, negative currency effects and lower raw material prices. Because of the latter, the inventories would have to be devalued, the company announced yesterday after the stock market closed. The DAX group is now taking a more cautious view of its profit margins and is therefore likely to miss analysts’ current expectations.
The world’s largest reinsurer Munich Re is planning another jump in profits for the coming year. Thanks to increases in all business areas, the surplus is expected to reach around five billion euros. This means the profit target is eleven percent above the 4.5 billion euros that CEO Joachim Wenning has set for 2023. Analysts recently assumed almost 4.6 billion euros for the current year and almost five billion euros for 2024.
The VW software subsidiary Cariad has agreed on an efficiency program with its works council. By 2028, internal costs should fall by 20 percent. The necessary staff reductions should take place without layoffs through severance pay. In return, job security will be extended until 2029. This was agreed upon with the works council. Cariad had previously informed its employees about the plans at a works meeting.
The industrial and automotive supplier Stabilus is leaving its dividend unchanged. For the 2022/23 financial year that ended at the end of September, shareholders will receive a dividend of 1.75 euros per share, as the MDAX-listed company announced. In the past 2022/23 financial year, Stabilus achieved a net profit of 103.3 (previous year: 104.3) million euros of 1.22 billion euros.
The financial service provider Hypoport is merging parts of its divisions after the slump in business in real estate financing. The brokerage, financing and valuation of private residential properties is bundled in the new “Real Estate & Mortgage Platforms” segment. Everything about financing consumers and businesses ends up in the “Financing Platforms” section. Only the insurance division remains unchanged.
The US car giant General Motors is cutting around 900 jobs, around a quarter of the workforce, at its ailing robotaxi company Cruise. The majority of engineers should be exempt from the cuts. Cruise’s once aggressive growth strategy came to an abrupt halt after an accident involving a pedestrian in San Francisco in October.