Dusseldorf The German stock market closed deep in the red on Friday. the Leading index Dax lost 1.9 percent to close at 15,604 points, down 308 points from the previous day’s close. The daily low was even 15,457 digits, so the stock market barometer reached a new low for the year.
The trading day had the character of a sell-off, a significant slide in prices with a high trading volume at the same time. The Dax only found stability below 15,500 points and limited its losses.
Conversely, the “buy the dips” mode – every price setback is seen as an opportunity to buy – is apparently coming to an end. This pattern characterized almost the entire stock market year 2021, which explains that there were only minor price declines during these twelve months. Now “Sell the Rally” applies more and more. Rising prices are seen as an opportunity to sell, and the market as a whole is trending downwards.
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Such behavior was evident in the United States on Thursday. There, after four losing trading days, an initial price recovery ultimately collapsed. The US stock markets continued to fall on Friday.
This confirms the forecast of the Handelsblatt survey Dax-Sentiment that only a sell-off can end the current weak phase. The numbers next Monday should show whether this slide on Friday is sufficient.
As on Wednesday this week, the focus of the German stock exchange barometer was the 200-day line, which is currently listed at 15,608 points. Many investors base their decisions on this moving average, which shows the long-term trend.
As recently as last Wednesday, around 30 points above this line, lively interest in buying started again, which then pushed the leading index up by 270 points. But now the Dax has given up this support.
The sell-off ended on Friday in the 15,500/15,450 area. The reason for this could be domestic professional investors who sold their newly acquired short products, the prices of which rise when prices fall, at a profit. This is indicated by a survey by the Frankfurt Stock Exchange.
The mark of 15,000 jobs, which has existed since April of last year, is decisive for the medium-term trend. Sustained prices below this mark are likely to result in a longer-lasting sell-off.
Small expiry date without great relevance
Friday was the small expiry day on which options on indices and individual stocks expire and are settled. It was important for investors to know at which price points the largest outstanding volumes of the options can be found.
But the positioning of the futures market professionals did not have a major impact on the price development. At the Dax, the largest positions expiring today were too far away from the current index level to really move prices. The important put options were at 15,200 and 15,000 points. On the call side there were 16,500 and 16,200 positions.
“The Ukraine crisis is causing uncertainty on the stock markets”
Bonds are in demand again
In contrast to equities, bonds were in demand again. Fear of a Russian invasion of Ukraine, but also the prospect of continued loose monetary policy in the euro zone prompted investors to buy Bunds. US government bonds were also bought again. This pushed the yield on ten-year Treasuries to 1.7581 percent.
Cryptocurrencies are currently also affected by the risk aversion towards risky asset classes such as shares. Bitcoin, which started the new stock exchange year at prices close to the $50,000 mark, has fallen by ten percent to just under $39,000 in the last 24 hours of trading, according to data from the Coinmarketcap website. According to data from analytics site Coinglass About $726 million worth of positions have been liquidated in the last 24 hours, about 30 percent of which is in Bitcoin.
Sale at the Netflix-Share
In the coming week, the big tech values like Apple and Microsoft look at their books. Streaming market leader Netflix gives a first indication of how the numbers could turn out: After the corona boom, it only expects weak user growth. The company thus remained well below the forecasts of the analysts. The stock fell about 20 percent on Wall Street. Netflix’s bleak business outlook also brought down the stocks of other streaming providers Disney strong under pressure. Disney titles fell five percent.
The course of the price also showed how nervous the market is at the moment peloton, a manufacturer of fitness equipment. Reports of an upcoming production stop caused the stock to fall by ten percent. A denial by the CEO could only mitigate the price decline, not stop it.
Gold price has ended its downtrend
Ongoing tensions between Ukraine and Russia are affecting the precious metals market. Palladium is primarily affected. The course has risen above $2,000 a troy ounce (31.1 grams) again and is currently at $2,050. According to that CommerzbankAnalyst Daniel Brieseman considers Russia an important palladium supplier. “An export stop of the raw material that is so important for the automotive industry could probably not be compensated.”
Gold is also enjoying renewed popularity. The price of the precious metal was trading at up to $1,843 per troy ounce (around 31.1 grams) on Thursday, close to the two-month high. According to Briesemann, the most recent price impulse was due to US investors, who are again directing money into physically backed gold index funds.
The technical analysis signals further rising prices. Because the downward trend since the summer of 2020 has dissolved. According to Jörg Scherer, technical analyst at HSBC Germany, the foundation has been laid for a start at the previous record high of 2072 dollars.
On the way there, the former record high of 2011 at 1920 dollars marks an important milestone. This level aligns well with last year’s June high of $1916. The situation is likely to change if gold prices fall below December’s low of $1753.
Look at other individual values
German Stock Exchange: Winners in the Dax 40 were rare. Deutsche Börse shares rose 0.9 percent and reached their highest level since summer 2020 at EUR 163.35. Investors apparently assume that the current fluctuations on the financial markets are beneficial for the stock exchange operator’s day-to-day business. Beiersdorf ended trading unchanged, with the remaining 38 stocks falling.
Nordex, Siemens Energy: The biggest losers in the Dax were titles from SiemensEnergy. Disappointing quarterly results from Siemens Gamesa put the papers, which also affected the share of the wind turbine manufacturer and competitor Nordex. The paper of the Siemens Gamesa parent company Siemens Energy gave way 16.6 percent. Nordex shares lost 8.1 percent.
In recent months, the Nordex share has become the focus of short sellers, who are betting on falling prices. The short quota for the wind turbine manufacturer has doubled since the summer of last year and is currently around seven percent. The consequences of the global supply chain problems are currently burdening the SDax company, the management has already cut the annual forecast.
Here is the page with that Dax course, here there are current tops & flops in the Dax.