Dusseldorf The descent of the Dax accelerated on Thursday. The leading German index closed the sixth consecutive trading day in the red and closed trading at a loss of 3.2 percent at 12,367 points. The daily low was even at 12,212 points, all 30 DAX values were weaker from trading.
The price decline also continued on Wall Street, with the leading indices Dow Jones and S&P 500 each losing more than three percent in the first few hours of trading. Many Asian markets had already given in significantly earlier. But not the mainland Chinese indices: The Hang Seng from Hong Kong, the Shanghai and the Shenzen Composite were all up slightly at the close. Since the beginning of the week alone, market values of around three trillion euros have been destroyed worldwide.
The reason for the sale is the corona virus. However, it is not the spread per se that is decisive for the markets, but the reaction of the politicians. The temporary paralysis of the Chinese economy was due to political decisions. Now there are fears that something similar could also happen in Europe – in other words, that the economy will also be slowed down here due to the restrictions imposed by the governments.
As a result, the classic “risk-off” scenario continued on the markets on Thursday. Stock market prices fell, bond yields fell, as did the oil price – the price of the US WTI fell more than four percent below $ 47. Instead, the three classic “safe havens” were bought: in addition to gold, the low-interest currencies Swiss Franc and the Japanese Yen are also included.
Above all, the gold price is in Corona fever and rose by a further 0.8 percent to $ 1,652 per troy ounce. The price of the yellow precious metal reacted early to the epidemic. Many investors have entered the market, which can be seen from the record volume of exchange-traded index funds (ETFs). If there is a pandemic, higher gold prices are likely.
A look at the US bond markets shows how the global economy is doing. On the one hand, the yield on ten-year US Treasuries has been falling to new record lows for days, on Thursday today to 1.241 percent. And the negative yield spread between ten-year US government bonds and three-month government bonds, which was widely recognized as a harbinger of a recession, was minus 18 basis points at the close of trading – a recession signal.
Usually, the interest rate always increases with the term, there is more return for longer-term bonds. After all, investors have to give up their money for longer – with all the risks. Experts call the current constellation an inverse interest curve.
An important indicator of the end of the sell-off could be the trading volume. Because according to the weekly Handelsblatt survey Dax-Sentiment, only a few investors expect Dax prices to rise in three months. So there are hardly any buyers who can ensure rising prices or at least stop the sell-off. So the Dax can only find a stop when there are only fewer sellers.
The trading volume on Thursday, however, shows with 191 million pieces traded and a turnover of 7.9 billion euros a similar value as on Monday of this week. For comparison: in the past week, the highest turnover on a complete day was a maximum of 3.8 billion euros. No end of the correction can be derived from the current trading volume.
Behavioral economist Joachim Goldberg is also skeptical. After evaluating a similar investor survey by the Frankfurt Stock Exchange, he sees the market in a rather uncomfortable position. According to his survey, the number of optimists has risen again. But they are more interested in quick money than in the prospect of solid price gains.
That means: These optimists sell their papers quickly again. In addition, he believes that international investors could face tax pressure.
Look at the individual values
Travel Industry: For the sixth consecutive day, shares in airlines, hotels and travel providers went down. The corresponding European index lost 3.8 percent. The spread of the virus causes noticeable failures at airlines. With a minus of 6.1 percent, Lufthansa shares were the second largest loser in the Dax. The cruise industry with providers such as Tui is also likely to feel headwind because some ships have recently been quarantined. The Tui papers dropped by 9.2 percent.
Bayer: The wave of glyphosate lawsuits against the company is waning somewhat. In daily business, however, things are going well. Bayer generated sales of EUR 10.75 billion in the fourth quarter, an increase of almost four percent. But the share price is going down. The minus at the close of trading was 4.3 percent.
Aixtron: The chip supplier’s shares fell 5.1 percent. The global economic slowdown has caused the company to decline profits in 2019.
Dürr: The growing demand for technology for electromobility has boosted the business of the plant manufacturer. Order intake rose by 3.7 percent, exceeding the four billion euro mark for the first time. In 2020, the Executive Board is targeting sales of between 3.9 and 4.1 billion euros and an increase in the EBIT margin to 5.2 to 5.7 percent. These numbers caused Dürr’s share price to skyrocket by 4.8 percent.
Zalando: The online fashion retailer’s shares fell 8.8 percent. Zalando expects slower growth for the current year. Possible negative effects from the coronavirus epidemic are not included in the outlook, writes Thomas Mail, an analyst at DZ Bank. Business development could be affected by the epidemic if delivery delays occur.
Qiagen / Drägerwerk: The winners included the shares of the biotechnology company, which rose by 2.1 percent. Qiagen has delivered a newly developed corona virus test kit to several hospitals in China. The papers of the medical technology provider Drägerwerk also rose by 0.2 percent, after having been up to 4.7 percent at times. The company reported increasing demand for respirators.
Handelsblatt analyst check: Independent Research recommends selling the Pfeiffer Vacuum share
The analyst house Independent Research has lowered the price target for Pfeiffer Vacuum according to key data for the fourth quarter from 135 to 120 euros and left the classification on “Sell”. In a study published on Wednesday, analyst Markus Jost rated the operating margin (EBIT) as disappointing in the current year as disappointing. He lowered earnings per share estimates this year and next.
Only two studies in the Handelsblatt analyst check deal with the Pfeiffer Vacuum share. Both recommend selling the stock.
Click here for the Handelsblatt analyst check.
Here is the page with the Dax course, here are the current tops & flops in the Dax. Current short sales by investors can be found in our short sales database.
Corona virus: “Don’t panic and sell everything”