Düsseldorf The German stock market calmed down again on Tuesday, but did not really move: it was midday Dax 0.1 percent up at 13,940 points. Attempts to break the 14,000 mark failed: The daily high is 13,995 points.
Yesterday’s trading day was a reminder for investors that things can go downhill again. At the end of trading, the index was 0.8 percent in the red at 13,937 points. The good news of yesterday’s trading day: The price slide to 13,807 points was over quickly, there was a high level of buying interest at this level. On the upside, the current record high from last Friday is now in focus. That is 14,132 meters.
Investors are currently positioning themselves for the new stock market year. And a look at the performance of the Dax and MDax shares over the past five days shows a clear direction.
The cyclical stocks are particularly popular. This is how the fertilizer manufacturer’s share has been in the MDax for the past five days K + S increased by more than 15 percent, followed by Siemens Energy (plus ten percent), Thyssen-Krupp (plus 9.1 percent) and Commerzbank (plus 6.7 percent).
The software company maintains the list of losers in the MDax Teamviewer with a minus of 7.8 percent. The stock was one of the big winners from the corona pandemic.
Real estate values fell significantly in both the MDax and Dax. The Dax members Vonovia and German living gave in more than three percent and formed together with BMW the flop-3 list for the past five trading days.
This trend is also evident on today’s trading day: Heidelberg Cement will increase by more than one percent at the start of trading, BASF, Infineon, Covestro and Deutsche Bank, Vonovia and Deutsche Wohnen real estate stocks are falling significantly.
The industry rotation will therefore continue in the new year. This paradigm shift began back in August of last year when the first news about a corona vaccine was published. This trend intensified in early November when Biontech and Pfizer reported the clinical success of their vaccine.
High dividend yielding stocks
The stocks with high dividend yields such as Bayer and BASF or the Deutsche Telekomwhich each have a value of around four percent. That would be in the MDax Telefónica, High Low and Metro with a dividend yield of more than seven percent.
These stocks are likely to be on the index winners list at the latest when prices on the stock market slide significantly. The prerequisite for this: the payment of the targeted dividend is still considered likely. Then these papers with such high dividend values would be “solid as a rock” in a negative interest rate environment.
Investors are euphoric
According to investor sentiment, there is a risk of a violent sell-off for the first time in a long time. According to the Handelsblatt survey Dax Sentiment, investor sentiment is extremely euphoric. “Depending on your position and strategy, it is never wrong to realize some partial profits,” says sentiment expert Stephan Heibel after evaluating the current survey.
However, investors should not do everything to ensure that prices slide significantly soon. Because such a euphoric mood can last a long time. Even if current investors fail to drive the price because they are investing on a large scale, there is always the possibility that new investors will crowd into the market due to the new record highs.
View of the VW-Share
Volkswagen: A media report about a possible recall of all models of the Golf VIII delivered is affecting the share. The shares lose 1.9 percent at the top and are among the biggest losers in the Dax. The latest version of the bestseller has to struggle with problems in the software control for the infotainment system and therefore has to go to the workshops, reports the “Frankfurter Allgemeine Zeitung”.
US yields continue to climb
Yields on the US government bond market continue to rise unchecked. Last week, this value exceeded the one percent mark for the first time since March 2020 and is currently 1.1529 percent.
The yields on US Treasuries have a guiding role for the financial market as a whole. Further rising yields would speak for a stronger dollar and against further rising share prices, bonds would then be an alternative.
The question is: When will the US Federal Reserve verbally intervene and stop this upward trend? So far nothing has been seen of it. On the contrary: “Interest rates could rise earlier than forecast as the economy is recovering faster than expected from the consequences of the Covid-19 damage,” said Atlanta Fed President Raphael Bostic yesterday, Monday.
He can well imagine that bond purchases will be scaled back this year. Should other members of the US Federal Reserve express themselves in a similarly optimistic manner, this should give US yields and thus also the US dollar a further boost.
Accordingly, the euro is unchanged against the greenback on today’s trading day and is trading at $ 1.2165. The gold price rises 0.7 percent to $ 1,860 per troy ounce (31.1 grams), but is still well below the level of the previous week.
Before the US yield on ten-year government bonds rose to over one percent, a troy ounce cost more than $ 1,900. Because gold does not yield any interest, with the rise in yields, US government bonds are moving more into the focus of investors again.
However, taking the inflation rate into account, real interest rates are still negative in the USA as well. This continues to speak in favor of gold, as does the expected sharp rise in US national debt as a result of new trillion-dollar economic stimulus packages from the new US government.
According to the commodity analysts at Commerzbank, the recent drop in gold prices was not accompanied by any significant ETF outflows. This is therefore likely to have been driven primarily by speculation. Before the crash, speculative investors had expanded their net long positions to their highest level in five months. Many were caught on the wrong foot with it.
What the Dax chart technology says
What’s the next goal on the top? For the bank’s technical analysts HSBC the mark of 14,228 points serves as the next point of contact. From a technical chart point of view, a target price of 14,700 meters can be derived in the coming days and weeks.
The calculation behind it: For almost six months, the German benchmark index moved sideways between around 13,500 points (exactly 13,460 points) on the top and 12,300 points on the bottom. Only at the end of October, shortly before the US presidential election, this phase was interrupted for a few trading days when the Dax slipped to 11,450 points. In retrospect, that was the signal for the strong continuation of the rally that followed.
Based on the range of the month-long sideways movement within 1200 points (13,500 minus 12,300), according to technical analysis, the coming trading range can also be estimated. That should have a similar breadth, so the Dax – roughly estimated – fluctuates between 13,500 points on the bottom and 14,700 points on the top.
The brand also provides further guidance: medium-term investors can raise their stop-loss level to 13,500 points.