Persistent interest rate fears: DAX before a new price slide

market report

Status: 09/26/2022 07:43 a.m

After falling to a new low for the year, the DAX remains extremely battered. At the beginning of the new week, investors on the German stock market have to be prepared for further price losses.

The worldwide tightening of monetary policy by the central banks is putting further pressure on the global stock markets. The DAX is likely to start the new trading week at a discount. The broker IG assesses the 40 German standard values ​​​​at the hour 0.9 percent lower at 12,170 points.

“There is simply a lack of buyers in the market who enter into medium to long-term commitments, trading is currently only determined by short-term players. Instead of 13,000, it is now about 12,000 points,” summarizes Jürgen Molnar, capital market strategist at RoboMarkets.

DAX price fall due to interest rate fears

In the past week, every hesitant attempt by the DAX bulls to push the leading German index back towards 13,000 points was thwarted. True to the old stock exchange rule “What cannot rise must fall”, the DAX then rushed to 12,180 points on Friday – and thus to its lowest level since November 2020.

Above all, investors are unsettled by the vehemence with which the currency watchdogs are taking action against the persistently high inflation. Until recently, many had not expected this. For example, the US Federal Reserve (Fed) raised its key interest rate by 0.75 percentage points for the third time in a row last week and announced further drastic interest rate hikes.

Waiting for the ifo index

Investors are also not encouraged by the latest economic data. For example, German purchasing managers are expecting a difficult winter. According to the latest survey, incoming orders in the manufacturing sector have fallen sharply and are now at recessionary levels.

Against this background, stockbrokers are eagerly awaiting the ifo index, which will be published today at 10 a.m. and reflects the mood in the German executive floors. Analysts expect a drop to 87 points from 88.5 points. In August, the barometer, which is closely monitored on the financial markets, fell for the third month in a row.

Dow Jones in bear market territory

The slide on the US stock exchanges also stopped at the end of the week. Investors plagued by recession fears pulled the ripcord on risky investments on Friday and sent prices on the stock markets to their lowest levels in almost two years.

The Dow Jones index of standard values ​​fell by 1.6 percent to 29,590 points – around 20 percent below its record level in early January. This is a bad omen for chart-technically oriented investors and, with a corresponding closing level, marks the entry into a so-called bear market in which pessimists take the helm.

The broader S&P 500 had already reached this point in June, losing 1.8 percent to 3693 points. The Nasdaq technology exchange index also fell sharply to 10,867 points. Over the past week, the Dow has fallen 4 percent, the S&P 4.6 percent and the Nasdaq 5.1 percent.

Japanese Nikkei deep in the red

Equity markets in Asia were weak in the morning on the fall of the British pound, Asian currencies and currency intervention by the Japanese authorities. The Japanese Nikkei index, which comprises 225 values, was two percent lower at 26,620 points. The Shanghai stock exchange was down 0.1 percent. The index of major companies in Shanghai and Shenzhen gained 0.5 percent.

Euro at a new 20-year low

In Asian foreign exchange trading, the “safe haven” US dollar is in demand. The greenback can gain significantly against all major currencies. In return, the euro also falls. The European common currency plunges to $ 0.9569, the lowest it has been in almost 20 years.

Pound falls to record low against dollar

Doubts about the sustainability of UK public finances trigger a sell-off in sterling. It falls 4.4 percent in the morning session to a record low of $1.0382. This is the biggest price drop since the March 2020 stock market crash.

“The significant tax cuts announced by the finance minister are causing great concern for the foreign exchange market in view of the rising national debt,” says Commerzbank analyst Ulrich Leuchtmann. At the same time, the planned relief threatened to exacerbate inflationary pressure. “The Bank of England (BoE) needs to step in today to stabilize the pound,” said Rabobank’s investment strategist Michael Every.

RWE signs LNG contract in the UAE

The energy group RWE signed a contract for the first delivery of liquefied natural gas (LNG) in the United Arab Emirates at the end of December. The agreement with the state-owned Abu Dhabi National Oil Company (ADNOC) provides for the delivery of around 140,000 cubic meters of gas – the first delivery to be handled via the floating LNG import terminal in Brunsbüttel. RWE spoke of a “milestone” for the development of an LNG supply infrastructure in Germany and a diversified gas supply.

Porsche AG restructures the supervisory board and trims its executive committee

Before the planned IPO next Thursday, the sports car manufacturer Porsche AG is reorganizing its supervisory board. The presidency will also be slimmed down from eight to six people, the Stuttgart-based company announced on Friday. In addition to Hans Michel Piëch, the Chairman of the VW Supervisory Board, Hans Dieter Pötsch, is also leaving the Executive Committee.

VW is considering increased production of ID.Buzz

Due to the high demand for the ID.Buzz, the Volkswagen commercial vehicle subsidiary VWN is considering expanding parts of its production. However, many customers will probably have to wait a while for the electric buses they have ordered. “However, we could well imagine setting up a hub for the ID.Buzz in one of our two plants in Poland,” indicated brand boss Carsten Intra.

Vonovia wants to tap into alternative sources of finance

The Vonovia housing group also wants to finance its growth with external investors in the future. “The old way of financing acquisitions, i.e. issuing new shares, is out of the question given the low share price,” said CEO Rolf Buch of the “Börsen-Zeitung”. Partners are to be involved in the holdings in Sweden and Baden-Württemberg.

Uniper nationalization not a long-term solution

An advisory body to the federal government sees the planned nationalization of the gas importer Uniper as a long-term threat to competition. In the “Süddeutsche Zeitung”, the chairman of the monopolies commission, Jürgen Kühling, warned that the step should not be a long-term solution. “We will then have to get back to competition. The aim must not be to create a permanent state gas monopoly.”

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