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Stock exchange in Frankfurt: Dax on a downward slide – US debt dispute makes you nervous

Stock exchange in Frankfurt: Dax on a downward slide – US debt dispute makes you nervous

The ongoing US debt dispute accelerated the downward momentum of the Dax on Wednesday. The leading German index lost a further 1.92 percent to 15,842.13 points. The strong price gains of the last two days of the previous week with a record high of 16,331 points have been completely consumed and the Dax, as market expert Thomas Altmann from asset manager QC Partners stated, is “back in its old trading range”. The MDax for medium-sized companies also fell further in the middle of the week, by 2.23 percent to 26,778.33 points.

The ongoing US debt dispute accelerated the downward momentum of the Dax on Wednesday. The leading German index lost a further 1.92 percent to 15,842.13 points. The strong price gains of the last two days of the previous week with a record high of 16,331 points have been completely consumed and the Dax, as market expert Thomas Altmann from asset manager QC Partners stated, is “back in its old trading range”. The MDax for medium-sized companies also fell further in the middle of the week, by 2.23 percent to 26,778.33 points.

While investors were still relaxed about US debt last week, the issue is now getting on their nerves more and more. According to forecasts by the US Treasury Department, the US government is threatened with default from the beginning of June if the debt ceiling is not increased – even if there are several ways to prevent this day X. This includes the prioritization of expenses, i.e. that pension payments are temporarily canceled so that foreign debt can be serviced.

In addition to the debt issue, the focus on Wednesday was the Ifo business climate, which had clouded over in May for the first time in six months. “The news situation could hardly be worse for stock investors today,” summarized expert Altmann the day. In addition, the portfolio manager pointed to the negative surprise in the UK inflation rate.

In the evening attention is then directed to the minutes of the most recent meeting of the US Federal Reserve. After Fed Chair Jerome Powell floated the possibility of a pause in the cycle of rate hikes, the market initially priced in a series of rate cuts, according to experts at Landesbank Helaba. But “in the meantime, interest rate expectations have risen again, and interest rate hikes in June and July are no longer ruled out by the market, albeit with a low probability”.

Infineon slipped by 5.4 percent as the tail light in the Dax and thus followed the very weak semiconductor stocks in New York trading, where Analog Devices, for example, collapsed significantly despite better quarterly figures than expected.

Armor titles continued to correct. In the Dax, Rheinmetall lost a further 1.8 percent, which, however, somewhat limited even higher discounts over the course of the year. Hensoldt’s armaments stocks, which are listed in the MDax, also recorded losses again on Wednesday, this time of 3.3 percent.

The full figures from ticket seller CTS Eventim for the first quarter showed a significant increase in profits. The well-performed shares still closed 4.9 percent lower. The reason for the price decline was that CTS had not become more optimistic despite the good start to the year and had only confirmed the roughly set goals for 2023. However, analysts were quite satisfied in their reactions.

The bright spot in the MDax was Evonik, which defied the weak overall market and the weak chemical sector at the top of the index with a plus of 2.8 percent. Reports about more positive price trends for methionine were ultimately decisive for the price increase. The animal feed protein is an important product for Evonik’s business.

After a sell recommendation from the US investment bank Goldman Sachs for Varta with a halving of the price target, the battery manufacturer’s shares continued their descent with a record low. At the end of trading, they were down 12.5 percent and trailed behind in the SDax small-cap index.

Stock markets across Europe were under considerable pressure. The Eurozone leading index EuroStoxx 50 closed 1.81 percent weaker at 4263.74 points. The losses in Paris and London were similarly high. In New York, too, the stock markets continued to decline. The leading index Dow Jones Industrial lost 0.7 percent at the close of the stock market in Europe.

The euro found no clear direction in a jittery trade. The shared currency was last traded at $1.0757. The European Central Bank (ECB) had set the reference rate at 1.0785 (Tuesday: 1.0779) dollars, so the dollar cost 0.9272 (0.9277) euros.

On the bond market, the current yield fell from 2.50 percent on the previous day to 2.48 percent. The Rex pension index rose by 0.17 percent to 125.32 points. The Bund future recently fell by 0.10 percent to 133.92 points.

Source: Stern

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