The Dax gave way on Monday. After the European Central Bank (ECB) indicated last week that there would be a break in interest rates, investors are now asking themselves whether the US Federal Reserve will take a similar approach on Wednesday, said chief market analyst Jochen Stanzl from CMC Markets. But that is “more than uncertain”. In addition, according to market observers, there is growing uncertainty as to how long key interest rates will remain at their high level on both sides of the Atlantic.
The Dax gave way on Monday. After the European Central Bank (ECB) indicated last week that there would be a break in interest rates, investors are now asking themselves whether the US Federal Reserve will take a similar approach on Wednesday, said chief market analyst Jochen Stanzl from CMC Markets. But that is “more than uncertain”. In addition, according to market observers, there is growing uncertainty as to how long key interest rates will remain at their high level on both sides of the Atlantic.
In the afternoon, the leading German index fell by 0.75 percent to 15,775.08 points. The MDax lost 0.92 percent to 27,064.42 points and the stock markets weakened again across Europe.
The week before, the DAX had gained around one percent and thus reacted positively to the ECB’s decisions. Although this raised the key interest rate again, it signaled that the interest rate hike that began last year to combat high inflation could be over. However, no word was said about when interest rates might fall again.
Despite its recovery, the German stock market barometer has not yet managed to break out of the range between 15,500 and around 16,000 points. What happens next could now depend on the Fed on Wednesday evening. But, according to capital market strategist Jürgen Molnar from RoboMarkets, Fed President Jerome Powell would have to “lean quite far out of the window to maximize the positive surprise potential of the meeting.” Because, writes Stanzl, the market now only estimates a “one percent remaining probability” of an interest rate increase by the US Federal Reserve.
The meeting remains important, even if there is still no talk of an interest rate cut. In Molnar’s opinion, it is not crucial whether there might be an increase of 0.25 percentage points this year. The main negative factor for the stock markets in the coming months will remain “the likely long persistence of high interest rates”.
Among the individual stocks, the shares of Fresenius, Rheinmetall and Muniche Re were in a neck-and-neck race for first place in the Dax. In the afternoon, the paper from the hospital operator and medical technology company Fresenius was once again in the lead with an increase of 1.1 percent. Fresenius benefited from a DZ Bank study: analyst Sven Kürten upgraded the stock to “buy”. “The “new” Fresenius – i.e. without FMC – is experiencing strong operational growth and has high potential for debt repayment,” he wrote.
Munich Re rose by 0.7 percent. DZ Bank had also written a positive study about the reinsurer’s shares and raised the fair value in it. In addition, the paper has also been included in the mixed-currency Stoxx Europe 50 since this Monday. Vonovia, on the other hand, had to leave the European index. The shares of Germany’s largest residential real estate company lost 1.5 percent.
The Rheinmetall paper rose by 0.8 percent. NATO Secretary General Jens Stoltenberg increased pressure on Germany to increase its defense spending. “In the Cold War, when Konrad Adenauer or Willy Brandt ruled, defense spending was three to four percent of economic output,” Stoltenberg told the newspapers of the Funke media group (Sunday). It was similar in his native Norway. “We did it then, and we have to do it again today.”
The index changes implemented this Monday only noticeably moved Ionos. The Internet service provider’s shares rose by 3.7 percent at the top of the SDax. However, it has fallen for the previous seven trading days. The shares of the stock exchange newcomer and hydrogen specialist Thyssenkrupp Nucera fell by 2.9 percent in the SDax.
The euro moved little at the start of the week. It was trading at $1.0668 in the afternoon. The ECB last set the reference rate at $1.0658 on Friday afternoon.
On the bond market, the current yield rose from 2.68 percent on Friday to 2.73 percent. The Rex bond index fell by 0.31 percent to 123.03 points. The Bund future fell by 0.16 percent to 130.06 points.
Source: Stern
