Market report: What now speaks against stocks

Market report: What now speaks against stocks
Written by insideindyhomes

market report

Status: 06/13/2022 07:37 a.m

The drop in prices on the German stock market continues. At the start of trading, the DAX continued to plummet. Investors have good reasons to exit the stock market.

The DAX started the new trading week with losses. At the start of trading on XETRA, the leading German index lost 1.4 percent to 13,564 points. Negative indications from overseas stock exchanges and persistent interest rate fears are causing a sell-off on the German stock market. On Friday, the DAX had already collapsed by 3.1 percent to 13,762 points, making it the biggest daily loss in three months.

The “inflation monster” keeps DAX investors in suspense

It is primarily the prospect of a prolonged series of sharp rate hikes by the Federal Reserve that is driving investors out of the global equity markets. The surprising rise in US inflation of 8.6 percent in May has also unsettled DAX investors.

“The inflation monster strikes again, increasing skepticism ahead of this week’s upcoming Fed meeting,” commented IG analyst Salah-Eddine Bouhmidi earlier this morning. According to the inflation data from Friday, an increase of 75 basis points can no longer be ruled out.

“Inflation has not peaked, it’s not even stagnating. It’s still accelerating, and it’s likely to do so in June,” said Aneta Markowska of investment bank Jefferies in a note today. “The inflation data is a tipping point, forcing the Fed to shift into higher gear and speed up monetary tightening.”

Problem child China keeps the markets in suspense

Another source of concern is the threat of lockdowns in China, where mass tests were carried out in metropolises such as Beijing or Shanghai at the weekend due to renewed corona outbreaks. This fuels fears that the Covid strategy will hurt the Chinese economy and global supply chains. Market observer Jeffrey Halley from broker Oanda speaks of a “black Monday” on the Asian stock exchanges.

Hoping for Turnaround Tuesday

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

Important DAX brand in focus

However, there is also a small glimmer of hope for DAX investors from a technical chart perspective. The DAX is currently rapidly approaching the 13,380 mark. At this level runs an important holding zone with the May low. This increases investors’ hopes of a rebound from this important chart technical support and the resulting at least short-term technical countermovement.

US futures deep in the red

However, the specifications for the DAX from the overseas stock exchanges are devastating. US futures are currently trading deep in the red. The future on the leading US index Dow Jones Industrial is currently losing 1.5 percent, the future on the technology-heavy Nasdaq 100 is even down 2.3 percent.

On Friday, the standard values ​​​​in the Dow Jones closed 2.7 percent lower at 31,392 points. The tech-heavy Nasdaq fell 3.5 percent to 11,340 points. The broad S&P 500 lost 2.9 percent to 3900 points.

Nikkei falls

The Asian stock exchanges also went down significantly at the beginning of the week. Interest rate fears and fears of new China lockdowns caused the price to fall by 3.0 percent to 26,987 points in the Japanese Nikkei. The Shanghai stock exchange is currently down 0.9 percent.

Euro falls below $1.05

The “safe haven” US dollar remains in demand on the foreign exchange markets. In turn, the European single currency continues to weaken and slips below the $1.05 mark. In the morning, a low of 1.0472 dollars was paid for one euro and thus less than last time in mid-May. This means that the exchange rate losses in the euro since the middle of last week have totaled around 3 cents. An ounce of gold costs $1,862, down 0.8 percent from the previous day.

Oil prices on the decline

Oil prices fell at the start of the new week. Traders cited the strong dollar and the gloomy corona situation in China as the reason. In the morning, a barrel (159 liters) of North Sea Brent cost US$ 120.26. That was $1.75 less than Friday. The price of a barrel of West Texas Intermediate (WTI) grade fell $1.82 to $118.85.

Bitcoin as cheap as it has been since December 2020

Meanwhile, the global flight of investors from risk is also reflected in the crypto markets. At the start of the week, the Bitcoin price temporarily fell below the $25,000 mark and thus to its lowest level since December 2020. The price of the digital currency had previously hovered around the $30,000 mark for weeks.

Bayer before important glyphosate decision

The DAX-listed company Bayer is facing a landmark decision in a long-standing legal dispute over the alleged cancer risks of its weed killer glyphosate. The US Supreme Court is expected to announce today whether it will accept the agri-pharmaceutical company’s appeal in a key case. But the chances of that happening are slim: Attorney General Elizabeth Prelogar advised the Supreme Court against it.

BASF boss warns of the consequences of a gas embargo

BASF boss Martin Brudermüller warns of the drastic consequences of a gas embargo for the chemical company. “If we are no longer allocated gas, we have a few hours to shut down the Ludwigshafen site,” said the manager of the “Süddeutsche Zeitung”. “Then the huge site would come to a standstill for the first time in its history.”

Qatar involved Total in new liquid gas project

Qatar has given the French energy group Totalenergies a 25 percent stake in a new liquefied natural gas project with which the Arab country intends to significantly increase its ability to export liquefied natural gas (LNG). The export volume of liquid gas should increase from 77 to 110 million tons per year by 2027.

Tesla announces stock split

With the US electric car manufacturer Tesla, another large US company has announced a stock split to make its shares cheaper for small investors. Tech billionaire Elon Musk’s company announced on Friday after the US market close that its board of directors would agree to a three-to-one split if shareholders approve it at the upcoming annual general meeting.

Credit Suisse on UK Financial Services Watch List?

According to media reports, Credit Suisse has landed in Great Britain on a watch list of the British financial regulator FCA. As the “Financial Times” reported on Sunday and with reference to a letter from the authority in May, the FCA expressed concern that the major bank had not sufficiently improved its corporate culture, governance and risk controls.

FDA: BioNTech/Pfizer Infant Vaccine Effective and Safe

The US Food and Drug Administration has confirmed the safety and effectiveness of the corona vaccine for children aged six months to four years. The evaluation of the data from a study did not reveal any safety concerns in connection with the use of the vaccine in small children. According to an initial analysis, the effectiveness of the vaccine in this age group is 80.3 percent. The FDA also found Moderna’s vaccine safe and effective for the age group.

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