Disappointing economic data from China caused further losses for the Dax on Wednesday. Weak US stock exchanges increased the downward pressure in the afternoon and the forthcoming vote in the US Congress on the compromise in the debt dispute caused uncertainty. Data on inflation in Germany had little effect on price developments on the local stock market.
Disappointing economic data from China caused further losses for the Dax on Wednesday. Weak US stock exchanges increased the downward pressure in the afternoon and the forthcoming vote in the US Congress on the compromise in the debt dispute caused uncertainty. Data on inflation in Germany had little effect on price developments on the local stock market.
The leading German index ended Xetra trading with a loss of 1.54 percent to 15,664.02 points. For the month of May, this results in a balance of minus 1.6 percent. In the meantime, things had looked very good for the most important German stock market index: almost two weeks ago, it had reached a record high of 16,331 points.
From a technical point of view, the picture for the Dax with the losses this Wednesday is clearly clouded over. Analyst Konstantin Oldenburger from broker CMC Markets estimates that the upward trend that has been ongoing since October last year is up for grabs. The MDax for medium-sized companies also ended trading on Wednesday with a discount of 0.96 percent to 26,537.41 points.
It remains to be seen whether market participants will now stick to the stock market adage “Sell in May and go away”, according to which they should sell shares in May and stay away from the stock exchange until the fall. For analyst Hal Cook from wealth manager Hargreaves Landsdown, the saying is a myth. By cashing in, investors may have missed out on earnings over the summer because historically, stock markets haven’t fared all that badly from May to October.
Inflation in Germany weakened significantly in May from a high level and also fell more sharply than economists had expected. Market traders are now trying to assess whether the pressure on the European Central Bank (ECB) to leave the path of interest rate increases in the near future will ease somewhat. However, inflation is still too high, even in the core rate, wrote expert Ralfcircul from the Landesbank Hessen-Thüringen. In his view, it would be premature to assume that the ECB will stand still in the coming month.
Investors avoided stocks of cyclical companies, which are therefore more dependent on economic developments, on Wednesday. The shares of the plastics group Covestro lost 4.9 percent as the weakest value in the Dax. The title of the auto supplier Continental was down 4.7 percent.
However, the utility stocks, which are considered defensive, held up well. Among the few winners in the Dax, RWE was ahead with a plus of 0.3 percent. The papers from the insurance industry, which were also perceived as rather defensive, developed differently. The papers of Hannover Re and its mother Talanx continued their recent run with further records. At the end of trading, Hannover Re was only slightly weaker, Talanx closed 2.8 percent higher.
In the morning, the General Association of the German Insurance Industry (GDV) published quite positive data on the storm damage of the past year. Across Europe, however, insurers were quite weak in the middle of the week, the sector lost 1.9 percent as one of the weakest in the Stoxx 600 industry tableau. The Allianz papers even dropped by 3.6 percent.
Similar to the Dax, other European indices lost significantly. The EuroStoxx 50, the leading index in the euro zone, slipped 1.71 percent to 4218.04 points, while the French Cac 40 and the British FTSE 100 were also weak. In New York, both the leading index Dow Jones Industrial and the technology-heavy Nasdaq 100 lost around 0.8 percent at the end of European trading.
At times, the euro fell against the US dollar to its lowest level in over two months. Most recently, the common currency cost $1.0646. The ECB had set the reference rate at 1.0683 (Tuesday: 1.0744) dollars, the dollar cost 0.9361 (0.9308) euros.
On the bond market, the current yield fell from 2.44 percent on the previous day to 2.31 percent. The Rex pension index rose by 0.78 percent to 126.41 points. The Bund future gained 0.36 percent to 135.88 points.
Source: Stern
