Market report: Witches’ Sabbath as a factor of hope?

Market report: Witches’ Sabbath as a factor of hope?
Written by insideindyhomes

market report

Status: 06/17/2022 12:57 p.m

After its recent slump, the DAX has initiated a countermovement. Will the leading German index turn around on a “Big Expiry Day”? It would not be the first time.

After yesterday’s slump, the DAX is trying to stabilize on the last trading day of the week. In early trading, it turned just above its three-month low of 13,008 hit yesterday. By midday, the German standard values ​​continue to expand their price gains. The provisional daily high is 13,233 points. This corresponds to an increase of 1.5 percent compared to the previous day’s closing price.

Negative investor sentiment as a price driver?

A glimmer of hope for the markets is the negative investor mood. “The most recent sentiment survey by the American Association of Individual Investors (AAII) shows an extremely high proportion of bears among US private investors of 58.3 percent. That is about twice as high as in the historical average,” emphasize the technical analysts at HSBC.

Economy update 06/17/2022

Dorothee Holz, HR, 17.6.2022 10:20 a.m

In the eyes of many market observers, such a high proportion of pessimistic investors is a counter-indicator and thus an indication of rising prices. Because most of these investors are likely to have sold by now; this increases the probability of a countermovement in the markets.

Turnaround on the Witches’ Sabbath?

In addition, with a view to the calendar, the DAX definitely has a chance of a bottom reversal, i.e. a turn to the upside. Because today is “Big Expiry Day”. On this day, investors close their long and short positions on the futures exchanges.

As a result, a market adjustment is taking place, which can certainly form the basis for a trend change. No wonder, then, that the market often marks important preliminary highs or lows around expiration days, which are then decisive for many months.

The overarching DAX trend continues to point downwards

But even if today’s price gains in the DAX were to continue in the coming week: More than a bear market rally within the overriding downward trend is hardly to be expected. Looking ahead, investors even have to be prepared for a reunion with the year-to-date low of 12,439 points from the beginning of March.

Because the technical and fundamental prospects for shares remain more than gloomy. The high rates of inflation and the central banks’ response to them pose a major threat to the global economy and corporate profits. The markets see the latest rate hikes by the Fed, SNB and Bank of England as a warning signal: Apparently more and more central banks fear losing control over the inflation expectations, after having hesitated for a very long time to even identify high inflation rates as an enduring problem.

Inflation rates have not yet peaked

“Rising bond yields and the associated fears of a recession, especially in the USA, are like mildew on the stock markets. We expect prices to continue to fall in the coming months,” emphasize Commerzbank economists Jörg Krämer and Bernd Weidensteiner.

In contrast to what was recently hoped for, inflation in both the euro zone and the USA is likely to reach new highs in June, the experts emphasize, pointing to the fact that fuel prices have risen again in the meantime. “In this environment, the market is likely to continue to revise its expectations for interest rates from the Fed and ECB upwards.”

Brent back above $120

Oil prices are rising in tandem with the rebounding stock markets. At lunchtime, a barrel (159 liters) of North Sea Brent costs $120.78. That is 0.8 percent more than the day before. The price of a barrel of the US West Texas Intermediate (WTI) variety climbed 0.7 percent to $118.37.

Euro still above 1.05 dollars

The euro recorded slight losses of 0.2 percent at lunchtime. The European common currency is currently trading at $1.0523 and is thus well above the $1.05 mark that was recaptured only yesterday. An ounce of gold costs $1846.

Revlon jumps in price thanks to takeover fantasy

A media report about a possible takeover gives Revlon one of the biggest jumps in the company’s history. Shares in the US cosmetics company, which filed for bankruptcy protection yesterday, are up up to 57 percent premarket on Wall Street. According to an Indian TV station, the conglomerate Reliance is interested in Revlon.

Porsche reaches settlement with US plaintiffs

In the DAX, the focus is on the VW share. The subsidiary Porsche has reached a settlement to settle civil claims in the legal dispute over allegedly misleading information on the fuel consumption of hundreds of thousands of cars in the USA. According to court documents, Porsche will pay car owners in the United States at least $80 million as part of the settlement.

E.ON shares asked for Goldman recommendation

E.ON shares, which have performed very poorly since the beginning of March, are among the most sought-after stocks in the DAX. A positive analyst comment is helpful here. Goldman Sachs’ Alberto Gandolfi recommends buying the shares. The financial risks associated with Russian gas supplies are difficult to calculate, but a supply freeze and a state brake on energy prices should now be priced in.

Canada and Germany are looking for a gas turbine solution

Together with Germany, Canada is looking for a solution for a turbine maintained there by the German manufacturer Siemens Energy for the Nord Stream 1 Baltic Sea pipeline. Siemens Energy is currently unable to return overhauled gas turbines in Canada due to the Russian sanctions. The Russian Gazprom group had previously stated that delays in the repair of gas compressors by Siemens are currently limiting the capacity of the pipeline. Federal Minister of Economics Robert Habeck said, however, that he considered the justification from Moscow to be advanced.

IG Metall questions the VW plant in China

IG Metall is demanding that Volkswagen withdraw from the Uyghur region in China, where the carmaker has a car factory. “Meanwhile there is hardly any doubt that human rights violations are taking place in Xinjiang,” said union boss Jörg Hofmann, who sits on the company’s supervisory board, to the “Wolfsburger Nachrichten”. Therefore, the group board must deal with the issue.

Google’s Russian subsidiary files for bankruptcy

According to an agency report, Google is making the bankruptcy of its Russian subsidiary official. A corresponding bankruptcy declaration had been filed today, the Russian news agency Interfax reported, citing court documents. Authorities previously seized bank accounts from Google Russia, making it impossible for the company to pay employees and suppliers.

US Steel outlook helps Europe’s steel companies

An optimistic outlook from US Steel encourages investors to invest in European steel companies. Shares in Thyssenkrupp, Salzgitter and ArcelorMittal rise by up to two percent. US Steel stocks are popular in premarket US business. The company is forecasting surprisingly high earnings of $3.83 to $3.88 per share for the current quarter.

Glencore with profit jump in trading business

High commodity prices are driving the trading business of mining group Glencore. The company expects adjusted operating profit (EBIT) of more than 3.2 billion dollars in the first half of the year in the corresponding marketing segment. This means that the forecast for the full year 2022 would already be exceeded in the first six months.

Dogecoin investor is suing Musk, Tesla and SpaceX

Tech billionaire Elon Musk and his companies Tesla and SpaceX have been sued for losses suffered with the crypto speculation object Dogecoin. US investor Keith Johnson accuses Musk and his companies of being part of an illegal Ponzi scheme that drove up the Dogecoin price and then crashed it. Johnson is seeking a class action lawsuit for anyone who gambled money off Dogecoins.

Musk wants a say in Twitter features

After a Twitter takeover, Elon Musk also wants to get involved in the product development of the service. At a video conference with Twitter employees, Musk said he assumes that employees would listen to his suggestions for features. Among the product ideas that Musk mentioned yesterday was, for example, taking money for today’s free user verification. He also confirmed the intention to fight against automated bot accounts.

Tesco: Inflation affects shopper behavior

Tesco makes the first consequences of high inflation on buyer behavior. Customers come to the supermarkets more often and the shopping baskets are less full, said the head of the largest British retail chain, Ken Murphy. When it comes to bread and pasta, cheaper suppliers are used more often. Tesco nonetheless confirmed its guidance and continues to target adjusted operating profit of between £2.4bn and £2.6bn for the full year.

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