Dax cuts initial high losses and climbs back above 14,000 points

Dusseldorf The sell-off mood in the German stock market is softening: the Dax is still down 0.7 percent at 14,092 points in the afternoon. In early trading, the stock market barometer fell as much as two percent and slipped below the 13,900 mark.

Investors sold stocks and bonds alike, and the cryptocurrency Bitcoin was not spared either. “Anything that involves risk flies out of deposits,” said capital markets expert Thomas Altmann of investment house QC Partners.

From a technical point of view, the situation on the German stock market has clearly deteriorated. Investors should now focus their attention on the bottom. Frankfurt’s benchmark index fell below last week’s low of 14,027 points.

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The next major stop at the bottom is 13,680 points. Therein lies the normal upward correction from March 7 to March 29, which ranged from 12,438 points down to 14,925 points according to technical analysis. The normal correction means a drop from the peak by 50 percent of the previous rise.

US bond market crash

Today’s topic is the US inflation rate for March. A new 40-year high is expected above the eight percent mark in the market. Because there is also a sell-off mood in the bond market. Since March 1, the 10-year US Treasury yield has soared from 1.71% to 2.82%.

Since yields develop inversely to the prices of such US bonds, there was a near-crash for these papers, which are supposed to be a safe haven. Ten-year US bond prices fell from 101 percent to 91.89 percent during this period, a loss of more than nine percent in six weeks. Such development takes several years in normal times in the bond market.

At the same time, securities with shorter maturities generate higher returns than those with longer maturities. That’s unusual because investors typically demand a higher return the longer they commit, and it’s thought to herald a recession.

Today’s US inflation data, due at noon, should also have a major impact on German government bonds. Yields on 10-year and 5-year Bunds hit their highest levels since 2014 on Monday. A 10-year federal bond currently brings in 0.858 percent, a five-year bond 0.65 percent. How far do yields have to rise before German government bonds become attractive to many investors again?

But where does all the money go? The only beneficiaries at this time are gold and silver. The price of one troy ounce (31.1 grams) of the yellow precious metal is currently $1,958, while silver costs $25.21. The price of gold has thus broken out of its trading range that has existed since mid-March and has at times risen to a four-week high of nearly $1,970. Gold continues to defy rising bond yields and real interest rates.

“The motto ‘cash is king’ seems to apply to most at the moment,” says capital market expert Thomas Altmann. That in turn gives hope. “Given the fact that there are still penalty interest rates for holding cash in the euro zone, this situation should not last long.”

The price of Brent oil is trading around 100 dollars

The first easing of corona restrictions in the Chinese financial and economic metropolis of Shanghai is easing concerns about demand in the commodity market. The price of North Sea Brent crude has risen about two percent to $100.51 a barrel. “The oil market is still vulnerable to a big shock if Russian energy is sanctioned, and that risk is still on the table,” said Edward Moya, a market analyst at brokerage Oanda.

However, the price of Brent has fallen by more than 30 percent since the beginning of March. At the time, a barrel was trading at $139.13 meanwhile.

Bitcoin drops below the $40,000 mark

The Bitcoin cryptocurrency continued its decline, dipping below $40,000 on Monday night, down nearly 10 percent from Sunday night’s high of $43,500. Bitcoin is currently trading at $40,147. The performance of the cryptocurrency market seems to broadly follow that of the stock markets.

Look at the individual values

Deutsche Bank/Commerzbank: After the US hedge fund Cerberus, the two German financial institutions are losing another big investor. On Monday night, the investment bank Morgan Stanley offered two blocks of shares of the two major banks, each of more than five percent, from the same investor. They should bring him a total of 1,750 million euros.

The bank did not name the seller. However, only US asset managers Blackrock and Capital Group have reported holdings of this magnitude in Deutsche Bank and Commerzbank.

According to the commissioned bank, 116 million shares of Deutsche Bank will be sold at a price of at least 10.98 euros, which is almost eight percent less than Xetra’s closing price on Monday. 72.5 million Commerzbank papers will be placed at 6.55 euros each, a good six percent below the closing price.

The discount is relatively high, in many cases the discount is five percent. Consequently, the price of the two shares fell significantly. Deutsche Bank will lose nine percent, Commerzbank eight percent.

Defense actions: Armor values ​​were once again demanded by individual values. Shares in Italian arms group Leonardo rose as much as 4 percent. Deutsche Bank analysts upgraded the shares to a buy on expectations of higher defense spending in the company’s main markets. Investors also saw optimistic business prospects at Rheinmetall. Titles topped the MDax winners list with an increase of more than three percent.

Evotech: The Hamburg biotech company grew significantly last year thanks to higher milestone payments from its partnerships. However, the stock is down one percent in a weak market environment.

Dermapharm: The Group can look back on the most successful fiscal year in the company’s history. Sales and profits increased significantly. Paper rises 1.7 percent. The drugmaker wants to significantly increase last year’s dividend. The Board of Directors and the Supervisory Board propose a distribution of EUR 2.17 (previous year: EUR 0.88) per share,

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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