All papers with interest rate risk fly out of deposits

Dusseldorf After soaring energy costs and ongoing supply chain issues, a third issue is coming to the fore today, Friday. Will the US Federal Reserve stall the economy with its increasingly aggressive tightening policy? These three points weigh heavily on business profits.

Given that prices are also falling in the bond market, which is developing in the opposite direction to yields, capital market expert Thomas Altmann of the investment house QC Partners is sure: “Anything that has a risk interest rate somehow flies out of the portfolio.”

Consequently, the Dax fell by two percent to 14,273 points this Friday, a loss of 230 points. However, the stock market barometer has already moved significantly away from the daily low of 14,208 points. Yesterday, Thursday, the leading index closed at 14,502 points, almost one percent.

US Federal Reserve Chairman Jerome Powell braced investors for aggressive interest rate hikes on Thursday night. A 0.5 percentage point hike in key interest rates at the next meeting in early May “is definitely an option.” This speech had already caused significant price losses on US stock markets.

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This announcement did not come as a surprise, as the market had long priced in 50 basis points more in May. What is new is that in the US four double rate hikes, ie 50 basis points each, are suddenly expected in a row.

According to the CBOE Chicago derivatives exchange, most professionals are now assuming an interest rate of between three and 3.25 percent. As recently as Tuesday of this week, this value was between 2.5 and 2.75 percent at the end of the year. Not surprisingly, US government bond yields are also rising significantly.

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Meanwhile, as of today, Friday, this value for a bond with a ten-year term is back at 2.967 percent and thus close to a multi-year high. The yield on two-year US government bonds, which react particularly sensitively to monetary policy, was 2.75 percent on Friday. In September of last year, this figure was 0.212 percent.

Investor sentiment does not indicate a drop

However, investors should not panic. If the sentiment analyzes are correct, there should not be a further drop like in the period between early February and early March, when the Dax fell over 3,000 points.

Behavioral economist Joachim Goldberg had already forecast a profit-taking in the range of 14,500 to 14,550 points on Wednesday night after evaluating the Frankfurt Stock Exchange survey of professionals and private investors, which “should represent a certain obstacle to the least temporarily. Although the Dax could even rise to 14,598 points on Thursday, that’s where the selling started.

Overall, Goldberg currently sees the Dax in a slightly better starting position for further price gains in the coming trading days, even if “trees shouldn’t grow to the sky.”

Sentiment expert Stephan Heibel also said after assessing Handelsblatt’s Dax-Sentiment survey that extremely negative reports could cause a sell-off, but that “should only be short-lived.”

The outcome of the French elections over the weekend could pose a risk to the markets. Every stockbroker, it seems, is assuming a second Emmanuel Macron presidency. A victory for Marine Le Pen should mean significant price losses for the markets.

Look at the individual values

SAP: The software group cannot convince investors with its quarterly figures. Shares are down 4.2 percent. While the software giant increased revenue on higher demand for its cloud offering, operating income fell on higher spending related to the Ukraine war, R&D and marketing spending.

The price loss also weighs on Dax, because SAP is the second largest value on Dax with a market value of €116 billion. Only Linde is heavier at 153 billion. There is a core support zone for SAP shares in the EUR95 price range. If prices here do not stabilize in the long term, the stock is threatened with a multi-year downtrend. That would be another mortgage for the Dax. In the year of the company’s 50th anniversary, SAP stock is miles away from its former favorite stock for investors.

Team Viewer: According to brokers, price losses at SAP are also bringing down Teamviewer. Shares of the software house lost almost 6 percent on top at 12.09 euros and thus mark the lowest level since mid-March. They are the weakest value in the MDax.

Rheinmetall: Shares in the small-cap MDax index rose as much as 3.2 percent to a record value of 224.80 euros. A stockbroker refers to a target price increase
the UBA. The analysts of the great Swiss bank now see the papers of the Düsseldorf arms group at 251 euros. Since the beginning of the year, Rheinmetall’s stocks have already increased by 160
percent increased.

Eagle groups: In a special investigation, auditing firm KPMG was unable to refute all the allegations made by British short-seller Fraser Perring against property investor Adler Group. According to the Adler Group, the report exempts them from the accusation of systematic fraudulent transactions. The news is well received in the stock market. Adler’s share price rose 14.5 percent to EUR 13.29. However, the paper has lost about half its value since June last year. At that time, the paper was trading at 27.74 euros.

Two stocks are trading at a dividend discount this Friday. Covestro pays EUR 3.40, Thursday’s closing price was EUR 46.37. The dividend payment is also the main reason why the stock lost around 4.55 euros, a drop of around 9.5 percent. Scheffler pays EUR 0.50, Thursday’s closing price was EUR 6.00.

Dax technical analysis

In the medium term: The downward trend in the Dax since the beginning of the year remains intact. Only sustainable quotes above 15,000 points should change anything in this starting position. The leading index just missed this mark on March 29 with its daily high of 14,952 points. So far, the price gains are just a so-called bear market rally.

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Short term: From the beginning to the end of March, the Dax had a rally of 2500 points. And the leading index is currently processing these gains. The low point of this short-term bearish move since the end of March is 13,887 points. Technical analysts call this a minimal correction, which is common after such a dynamic rally.

Here you can go to the page with the Dax course, here you can find the current tops & flops on the Dax.

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