DAX slips deeper into the red: Confidence is waning


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market report

Status: 05.04.2023 1:16 p.m

By midday, the DAX had moved further away from the high for the year it reached yesterday. Before the Easter holidays, investors do not want to be caught on the wrong foot in view of the weak US economic data.

The German stock exchange barometer has tumbled down to around 15,540 points, which corresponds to a daily minus of 0.4 percent. Yesterday the index had another new one Year high of 15,736 points markedbefore US jobs and US manufacturing data eroded gains.

“Unfortunate False Escape”?

Yesterday’s new high for the year seems satisfactory for the “stock market bulls”, “but could also turn out to be an unfortunate false breakout on the upside if lower-lying supports are broken down,” comments Konstantin Oldenburger from broker CMC Markets.

Wall Street without new impetus

In any case, the stock exchanges on Wall Street are unlikely to pick up any new momentum in the afternoon. Even before the stock market opens, data on the US labor market is due again, which could influence the stock market. Signs of a weakening US economy had already weighed on prices yesterday. US industry posted a drop in orders of 0.7 percent in February, significantly more than expected.

Risk of recession averted in Germany?

The leading economic research institutes no longer expect a recession in Germany due to falling energy prices. According to their forecast, gross domestic product (GDP) will grow by 0.3 percent this year. In autumn, under the impression of the energy crisis, a minus of 0.4 percent was estimated. “The economic setback in the winter half-year 2022/2023 is likely to have been less severe than feared in the autumn,” said Timo Wollmershäuser, head of economic activity at the ifo Institute.

German industry collects orders

The order books of German industry filled up strongly in February due to the strong demand from Germany and the euro zone. According to the Federal Statistical Office, new business grew by 4.8 percent compared to the previous month. This was the third increase in a row and at the same time the strongest since June 2021. “Incoming orders are therefore still on the recovery course in many sectors of German industry,” said the Federal Ministry of Economics.

Dollar weak

On the foreign exchange market, market participants are clearly reacting to the weaker economic prospects in the USA: the European common currency is approaching the 1.10 dollar mark and is currently quoted at 1.0953 dollars. The strength of the euro is actually more a weakness of the US currency, because the “greenback” is also currently declining against the British pound and the Japanese yen.

Oil remains expensive

Also the Oil prices remain on an uptrend. A barrel of North Sea Brent currently costs $85.23. The planned production cuts by the OPEC+ oil cartel continue to have an impact on the market. Oil prices are also currently being supported by a drop in US oil reserves, which was reported yesterday, experts say.

Utilities and Telekom at the top of the DAX

The shares of RWE and E.ON and the T-Share are among the strongest papers at noon in the DAX. The biggest price winner, however, is the title of the health care group Fresenius. There are now significant losses of around five percent each in the shares of the armaments group Rheinmetall and the automotive supplier Continental.

Telekom holds majority stake in US subsidiary

According to CEO Tim Höttges, Deutsche Telekom has acquired a majority stake in the US subsidiary T-Mobile. “We obtained a majority stake in T-Mobile US last night,” said the manager today at the general meeting in Bonn. Since 2013, the value of the US subsidiary has increased by 153 billion euros. The increase in value for Telekom shareholders is over 70 billion euros.

Morphosys shares in demand

Papers of the TecDAX company Morphosys rise by around five percent. The biotech company is apparently making faster progress than expected with the development of its promising drug Pelabresib. The most important results of the decisive phase 3 study for its drug against the rare malignant bone marrow disease myelofibrosis should be available by the end of the year, the group said in the evening.

Auto1 still in the red

The online used car dealer Auto1 was also in the red last year. The net loss of the IPO was 246.6 million euros. High used car prices in a bad economic environment had slowed down the business of Berliners in 2022. The used car market had collapsed by 17 percent in Europe in 2022 – in Germany even by 20 percent.

K+S loses after downgrading

The investment bank Stifel has downgraded the fertilizer group K+S from “buy” to “hold” and lowered the price target from 26 to 22 euros, the MDAX share lost around three percent. The price agreement in the industry with India for potash fertilizers finally brings clarity, but also confirms a lower price level, according to analyst Andreas Heine in a recent study. The contract only runs until September, after which there is a risk of a further decline.

Nordex issues convertible bond

Nordex papers also lose a lot. The wind turbine manufacturer received a little less than planned with the issue of a convertible bond. Subordinated and unsecured convertible bonds with a total volume of EUR 333 million were issued, as Nordex announced. The group announced the move yesterday evening and was aiming for a volume of around 350 million euros. Nordex intends to use the proceeds from the convertible bond to strengthen its balance sheet and improve financing costs.

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