Dusseldorf Investors can forget the hope of a quieter trading on the Frankfurt Stock Exchange. Today’s Thursday, the Dax loses 2.5 percent in midday trading and slips to 12,454 points. The daily low is even 12,442 points, a drop of 333 points compared to the previous day’s close.
The leading German index showed resistance for the first time this week on Wednesday. After a fall of 412 points to 12,369 points, the loss at the end of the trade was only 0.1 percent, the closing level was 12,775 points. It was the fifth consecutive minus, the longest negative series since July.
Now the crucial question is: will yesterday’s low last? At prices below 12,369 points, further panic sales could occur. Asian markets are already falling significantly and US futures contracts have hinted at a much weaker opening on Wall Street. Dow Jones and S&P are therefore 1.4 percent down, the Nasdaq is 1.5 percent lower.
Germany reports 80,000 infected and 130 deaths – but we are not talking about the coronavirus, but the rather average flu season 2019/20 so far. This is shown by the weekly reports of the Robert Koch Institute. Something more relevant for the markets is something else: the reaction of the politicians to the virus development.
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. That’s why the markets react like that.
The classic “risk-off” scenario continues on the markets today. The prices on the stock markets are falling, the yields on bonds as well as the oil price. Three classic “safe havens” are bought. In addition to gold, the low-interest currencies Swiss Franc and the Japanese Yen are also included. The rise in the Swiss franc is only cautious, presumably because the central bank in the neighboring country has no interest in a stronger currency.
The gold price in particular is in Corona fever and continues to rise by 0.4 percent to $ 1,645. 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, today at 1.2905 percent on Wednesday. And the much-noticed negative yield spread between ten-year US government bonds and three-month T-bills as a harbinger of recession was minus 18 basis points at yesterday’s close.
Usually, the interest rate always increases with the term, there is more return for longer-term bonds. After all, investors are rid of their money with cross-country skiers for longer – with all risks. Experts call the current constellation an inverse interest curve.
The similarly prominent yield advantage of ten-year government bonds over two-year Treasuries has also fallen from around 35 to 13 basis points since the beginning of the year. The market is apparently even anticipating a recession in the US, although the economy there is currently providing robust data.
All of this, of course, is fueling speculation about rate cuts, especially in the United States. Because while interest rates can no longer be significantly reduced in the euro area, the US Federal Reserve still has room for improvement. That is why the dollar has weakened against the euro in recent days. After a multi-year low of $ 1.077 in recent days, the single European currency is back at $ 1.09.
The Chinese central bank has already announced further support for the economy to mitigate the virus consequences. Another trend can be observed for currencies. Of the emerging market currencies, the Russian ruble has lost more than others. This is not due to the monetary policy of the Russian central bank, but to the significantly weaker oil price, which continues to slide today.
The North Sea Brent dropped 1.3 percent to $ 52.76 a barrel (159 liters), the American WTI slipped 1.2 percent to $ 48.15. In comparison to the previous week’s closing, crude oil has become cheaper by around ten percent. 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.
Yesterday’s trading volume, however, with 163 million items traded and a turnover of 7.6 billion euros, shows a value similar to that of Monday 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. Which means: These optimists sell their papers quickly again. In addition, he believes that international investors could face tax pressure.
Corona virus: “Don’t panic and sell everything”
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 5.8 percent, Lufthansa shares were the biggest 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 6.2 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 is more than three percent.
Aixtron: The chip supplier’s shares fell 4.1 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 figures cause the Dürr share price to skyrocket by five percent at times.
Zalando: The shares collapse by up to nine percent and are trading at EUR 40.38, the lowest level since mid-December. The online fashion retailer 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 4.4 percent at the top. Qiagen has delivered a newly developed corona virus test kit to several hospitals in China. The papers from the medical technology provider Drägerwerk also rose by up to 4.7 percent. The company reported increasing demand for respirators.
What the chart technique says
The list of broken support marks at the Dax is getting longer. Now the much-noticed 200-day line comes into focus. This line is listed at around 12,639 meters. It defines the long-term trend and therefore has a major impact on investors.
During the course of yesterday’s trading, the Dax slipped significantly below this line, and was over it again at the end of trading. Will the scenario repeat itself today? Investors should not necessarily speculate on this.
The first important resistances are the areas around 13,300 points and the downward price gap, which ends at 13,500 points. Such downward price gaps arise when the daily low of the previous day is above the daily high of the subsequent trading day.
Specifically: last Friday the lowest price was 13,500 points, the highest price on Monday was 13,236 points. If the Dax could establish itself sustainably above 13,500 points, that would be an important technical improvement.
A so-called “Inside Day” could provide a first reassurance. For this, the prices must remain within yesterday’s trading range today. On Wednesday, this was between 12,368 points on the lower and 12,849 points on the upper side.
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.