Market report: A typical Friday in the DAX?

Market report: A typical Friday in the DAX?
Written by insideindyhomes

market report

Status: 06/10/2022 09:53 a.m

The leading German index slipped further at the start of trading. A look at the calendar warns of caution: Friday is a day that does not have a very good reputation on the stock exchange.

The DAX started the last trading day of the week with losses. At the start of trading on XETRA, the German standard values ​​fell 0.6 percent to 14,110 points. Weak US targets, fears of inflation and interest rates, rising bond yields and a negative chart technique are causing problems for investors.

DAX tests 14,000 point mark

In early trading, the leading German index slipped further towards the psychologically important 14,000 point mark, which is now likely to be subjected to a first test. The DAX is technically clearly battered after its recent price slide.

Yesterday the German stock exchange barometer lost 1.7 percent to 14,199 points. With the slide below the two most recent daily lows at 14,359/14,330 points, the DAX sent a technical sell signal.

Stock exchange statistics not on the side of the DAX “bulls”

Also, today is Friday. That could prompt some investors to reduce their risk ahead of the weekend. From a statistical perspective, too, the probability of price losses is higher on no other day of the week than on Friday.

In the past there have often been such price slumps on the stock exchange, which started on a “Panic Friday” and continued on a “Black Monday”. From a statistical point of view, there is only a good chance of an upward turn again on “Turnaround Tuesday”.

Rising yields make bonds attractive

Particular attention continues to be paid to the bond markets: ten-year Bunds are yielding 1.43 percent, which is close to the eight-year high marked the day before (1.47 percent).

“Bonds are therefore increasingly recommended as an alternative to dividend stocks,” emphasizes IG analyst Christian Henke. “Rising interest rates could stall the economy and trigger a flight to safe fixed income.”

Has the ECB lost inflation control?

The fundamental background to the rising bond yields and falling share prices is yesterday’s meeting of the European Central Bank. The ECB surprisingly committed itself to the date and level of the turnaround in interest rates, all key interest rates are to be raised to 25 basis points in July. The market is now anticipating a base rate of 1.5 percent in the euro zone by the end of the year.

That’s more than market participants expected ahead of the ECB meeting; Accordingly, the monetary authorities around Christine Lagarde caught many investors on the wrong foot. The question remains whether the tightening of monetary policy promised by the ECB will be enough – or whether it has already lost control of inflation expectations, as some economists criticize.

“In our estimation, the inflationary pressure is likely to be stronger and more sustained, which will force the ECB to raise interest rates more courageously and aggressively. The US Federal Reserve could be a role model,” emphasized Ulrike Kastens, chief economist for Europe at asset manager DWS, yesterday after the ECB meeting.

Inflation fears push Dow and Nasdaq lower

Fears of inflation and concerns about interest rates were also the main topics on the New York stock exchanges yesterday. This afternoon, consumer price data for May will be released before the US Federal Reserve will send fresh monetary policy signals again next week.

The Dow Jones index of standard values ​​closed 1.9 percent lower at 32,272 points. The tech-heavy Nasdaq fell 2.8 percent to 11,754 points. The broad S&P 500 lost 2.4 percent to 4017 points. Ten-year US government bonds yielded 3.07 percent, the highest they have been since mid-May.

Nervous investors push Nikkei deep into the red

At the end of the week, the price losses on Wall Street also dampened the mood on the Asian stock exchanges. Japan’s Nikkei index fell 1.5 percent in Tokyo, while the broader Topix fell 1.3 percent. In Hong Kong, the Hang Seng Index was little changed. “The financial markets are nervous,” commented the analysts from the financial house ANZ. In view of the rising prices, it could be that the central banks tightened their monetary policy significantly for a long time.

Gold falls, euro slightly higher

The euro gains only some ground in early forex trading after yesterday’s slide against the dollar. The European common currency is up 0.2 percent to $1.0635. Yesterday, a euro was worth 1.771 dollars at the high. A troy ounce of gold cost $1,844 in early trading, down 0.1 percent from the previous day.

Oil prices ease slightly

Oil prices eased slightly in early trading. In the morning, a barrel (159 liters) of North Sea Brent cost US$ 122.36. That was 71 cents less than the day before. The price of a barrel of West Texas Intermediate (WTI) was down 65 cents to $120.86.

The situation on the oil market remains tense given the significant excess demand. The oil cartel OPEC+, to which Russia belongs, has been struggling for a long time to meet its self-imposed production targets for a number of reasons.

Another glyphosate success for Bayer in the USA

In the DAX, focus is on Bayer stock. The group has won another lawsuit in the USA about alleged cancer risks from the weed killer glyphosate. A jury in a Kansas City, Missouri court ruled in favor of Bayer yesterday, ruling that the herbicide was not responsible for plaintiff Allan Shelton’s illness.

Thyssenkrupp subsidiary buys shipyard in Wismar

After the insolvency of the MV Werften Group, a new start is on the horizon for the Wismar shipyard. A buyer has been found in the Kiel armaments company Thyssenkrupp Marine Systems (TKMS). Instead of freighters and cruise ships, submarines for the navy are to be built in Wismar in the future. Insolvency administrator Christoph Morgen wants to provide information about the forthcoming takeover and future plans from 11:30 a.m. today.

Nestlé is once again shipping tons of baby milk powder to the USA

The Swiss food company Nestlé is again selling 28,200 cans of baby milk powder to the USA. The US Food and Drug Administration (FDA) announced yesterday that the more than 22 tons of goods would be sourced from Nestlé Germany. The US Department of Health and Human Services is currently examining ways to bring the products to the US as soon as possible.

US investigators take a closer look at Tesla’s “autopilot”.

The US Department of Transportation has expanded its investigation into Tesla’s Autopilot driver assistance system after a series of rear-end collisions. Since the investigation began in August, she has identified six other incidents in which Teslas with the “Autopilot” system turned on crashed into emergency vehicles parked on the side of the road. Originally, there were eleven such accidents.

SEC launches investigation into Ericsson

The Swedish network supplier Ericsson has been targeted by the US Securities and Exchange Commission. The agency has launched an investigation into Ericsson for possible bribery payments in Iraq, the company said. Ericsson fully cooperates with the stock exchange supervisory authority. It is too early to predict the outcome of the test.

Refinery accident causes kerosene bottlenecks at Vienna Airport

The accident in the OMV refinery in Schwechat now also has an impact on the kerosene supply at Vienna Airport. Due to the damage to the main distillation plant, there are now bottlenecks in kerosene, and Vienna Airport has been informed of this, a company spokesman said. However, there are no effects on flight operations.

Warning strike at Easyjet in Berlin

Warning strikes have been affecting air traffic of the airline Easyjet at the capital’s airport BER since the early morning. “The first flights have failed,” said Verdi negotiator Holger Rößler. The union had previously called on around 450 cabin employees at the company to stop working at the Schönefeld site between 5 a.m. and 10 a.m.

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