Status: 06/20/2022 09:57 a.m
After its recent 1700-point fall at the start of trading, the DAX can make up some ground again. But the current price gains in the leading German index should be treated with caution.
At the beginning of the week, there is another attempt at stabilization in the DAX. At the start of trading on XETRA, the 40 German standard stocks jumped 0.6 percent to 13,208 points. The DAX can initially move up a little further from its three-month low of 13,008 points in the previous week. Since Whit Monday, the leading German index had lost 1700 points at its peak.
Important DAX brands in focus
The focus of technically oriented investors is now on the recovery trend since the March 2020 low (currently at 13,202 points). Should the DAX regain this important support at the end of the day, the technical picture would brighten up a bit.
The daily high from Friday at 13,237 points is also significant for the further course of trading: A jump above this would help the ongoing upward movement to gain new momentum. Should the recovery rally fail, however, investors would have to expect a reunion with the low for the year from early March at 12,439 points.
Fears of gas, interest rates and inflation are rampant
Meanwhile, the fundamental prospects for equities remain more than gloomy. The scenario of a Russian gas supply stop is becoming more and more likely. In this case, experts fear an immediate recession in Germany.
In addition, the high inflation rates and the central banks’ reaction to them pose a major threat to the global economy and corporate profits. The markets see the latest interest rate hikes by the Federal Reserve (Fed), Swiss National Bank and Bank of England as a warning signal: Apparently more and more people are afraid Central banks are losing control of inflation expectations after a long hesitance to even identify high inflation rates as an enduring problem.
Producer prices are rising at record speed
A look at the producer prices published today shows that inflation rates have not yet peaked. These rose by an average of 33.6 percent in May. “This was the highest increase compared to the same month last year since the survey began in 1949,” said the Federal Statistical Office.
This means that commercial producer prices have recorded new record increases every month since December 2021. Producer prices are considered an important precursor for the development of consumer prices.
Economic worries push Nikkei into the red
The fear of a global economic downturn weighed on the Asian stock exchanges at the start of the week. At the close of trading in Tokyo, the Nikkei index, which comprises 225 values, was 0.7 percent lower at 25,771 points. The Shanghai stock exchange, on the other hand, was up 0.1 percent.
Good guidance from the Nasdaq
Inconsistent specifications for today’s trading day come from Wall Street. Investors had only partially ventured back to the US stock exchanges on Friday. The Dow Jones index of standard values closed 0.1 percent lower at 29,888 points. The tech-heavy Nasdaq, on the other hand, advanced 1.4 percent to 10,798 points. The broad S&P 500 gained 0.2 percent to 3674 points.
“Markets will not calm down until there is a sense that actions by the Fed and other central banks will be successful not only to curb inflation but also to try to prevent a global recession,” said Kenny Polcari, managing partner at the consulting firm Kace Capital.
Oil prices remain at a low level
Meanwhile, tailwind for the stock markets comes from the lower oil prices. A barrel (159 liters) of North Sea Brent cost $113.07 in early trading. That was five cents less than on Friday. The price of a barrel of US West Texas Intermediate (WTI) grade also fell slightly to $109.42.
At the end of the week, investors’ persistent fears of a recession caused the price of oil to drop sharply. Brent lost up to 5.7 percent, WTI fell by 6.7 percent at the top.
Bitcoin falls below $18,000 at times
Crypto market sentiment remains shaky. At the beginning of the week, Bitcoin lost up to 5.1 percent to $ 19,586. At the weekend, the oldest and best-known cyber currency fell to its lowest level since December 2020 at $ 17,588.
For comparison: In November, around $68,000 was paid for a bitcoin. “Breaking $20,000 shows that confidence in the crypto industry has collapsed,” said OANDA market analyst Edward Moya.
Gold a little more expensive again
The euro may continue to stabilize above the $1.05 mark. The European single currency is currently trading at $1.0524. The dollar, which is also trading somewhat weaker against other important currencies, is benefiting the price of gold. The price of a troy ounce of the yellow precious metal rose in the morning by 0.2 percent to 1843 dollars.
Delivery Hero has to vacate the DAX for Beiersdorf
Just a few months after being dropped from the DAX, the consumer goods manufacturer Beiersdorf is now returning to the top stock exchange league. In return, the food delivery service Delivery Hero has been relegated to the MDAX. The operator of wind and solar parks Encavis, which was previously listed in the SDAX, will also be included in the MDAX, swapping places with the financial services provider Hypoport.
PNE Wind in the SDAX for the first time
In addition to Hypoport, the armaments company Hensoldt and the special pharmaceutical company Medios are now represented in the SDAX again, as well as the wind farm project developer PNE for the first time. The laser expert LPKF, the wind turbine manufacturer Nordex and the carbon fiber specialist SGL have to be eliminated.
New glyphosate risks for Bayer in the US?
The US Environmental Protection Agency has been ordered by an appeals court to re-examine the health risks of glyphosate. The court cast doubt on the EPA’s assessment that the active ingredient in Bayer’s controversial weed killer Roundup poses no particular risk to humans. Bayer is facing numerous US lawsuits in the United States alleging cancer risks from glyphosate.
RWE boss calls for reactivation of coal-fired power plants
The head of the energy group RWE, which is listed on the DAX, Markus Krebber, has advocated a temporary reactivation of coal-fired power plants in order to save scarce and expensive natural gas. “In the electricity sector, additional coal-fired power plants should be running instead of gas-fired power plants as soon as possible,” Krebber told the Süddeutsche Zeitung.
Airbus: talks with Qatar Airways in the paint dispute
Airbus wants to settle the dispute with its customer Qatar Airways in talks. “There is progress in the sense that we communicate and work together,” said Airbus boss Guillaume Faury in Doha. The aircraft manufacturer and the airline have been arguing in court for months. It is about paint and surface damage on long-haul jets of the Airbus A350 type.
Pfizer takes a stake in vaccine developer Valneva
The US pharmaceutical company Pfizer is investing in the vaccine developer Valneva. For 90.5 million euros, Pfizer is acquiring a good eight percent stake in the Franco-Austrian biotech company via a capital increase. Valneva intends to use the proceeds from the equity investment to finance its Lyme disease vaccine, which is scheduled to enter the third and final phase of clinical development in the third quarter of this year.
USA before the start of corona vaccinations for small children
After an advisory board to the US Food and Drug Administration (FDA), the CDC has also spoken out in favor of using coronavirus vaccines in children between the ages of six months and five years. Both the vaccine from the manufacturers BioNTech and Pfizer and the preparation from Moderna could be used for around 18 million small children. According to the US government, it could start as early as tomorrow.
Easyjet cancels more flights
The low-cost airline Easyjet is canceling further flights due to the acute shortage of staff at airports and on board. The offered capacity in the current quarter will amount to 87 percent of the pre-crisis level of 2019 and in the summer quarter, the peak travel season, to 90 percent, as Easyjet announced. Up to now, 90 percent were planned for this quarter and 97 percent for the coming quarter.
Does Credit Suisse have an oligarch problem?
Credit Suisse is faced with a new multi-million dollar legal case. As the “Sonntagszeitung” writes, the Russian-born oligarch Vitaly Malkin is demanding 500 million francs from the major Swiss bank. Credit Suisse rejects the allegations.
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