Price losses reduced: ECB tips the DAX scales

Market report

Status: 09.09.2021 13:59

The DAX was able to significantly reduce its early price losses. It is now up to the ECB to continue reassuring investors. Otherwise, there is a risk of a new downward round on the German stock market.

The DAX was able to partially make up for its heavy early losses in the course of trading. The rate of fluctuation remains high. There are over 130 points between the daily low (15,454) and the daily high (15,588).

At lunchtime, the German benchmark index ranks just below its high for the day, but is still heading for the third day of losses in a row. Since its high at the beginning of the week at 15,959 points, the DAX has lost more than 500 points or 3.2 percent.

“The German share index is now about a lot, if not everything. Either the current level is maintained, then the weakness of the past few days would even have to be assessed in terms of an ongoing outbreak,” explains Jochen Stanzl, chief analyst CMC Markets.

“If the index continues to slide, volatility could rise again sharply. Downwards there would then be a good 500 points space for the next supports. The 200-day line runs at just under 15,000 points.”

“Today in the Dax could be groundbreaking,” emphasize the Citi analysts. “Classically, yesterday’s losses are a bearish signal and the risk of a correction to 15,400 / 300 points and even up to the 14,800 point range has increased noticeably.”

All eyes on the ECB

Where the DAX is headed is likely to be determined by today’s council meeting of the European Central Bank (ECB). Do the monetary authorities around Christine Lagarde tend to give the markets a carrot or a stick?

In any case, it could be difficult with the carrot, because the desired variant of the markets – an increase in the bond purchase program – is probably not an option. Rather, most experts anticipate that the ECB will announce a slower buying speed for the fourth quarter and thus usher in the tapering process.

“It is up to Christine Lagarde to sell this reduction as normalization. Market participants rightly see a more restrictive monetary policy in this, and interest rates on the bond markets are rising,” emphasizes Robert Rethfeld, market expert at Wellenreiter-Invest.

Investors on Wall Street are also concerned that the US Federal Reserve may start tapering, i.e. reducing bond purchases, earlier. New York Fed President Williams said on the night that the tapering might come sooner rather than later.

This put the US futures under considerable pressure at times. The future on the Dow Jones has currently recovered somewhat, but with a minus of 0.3 percent it is still in the red and indicates a negative start to trading on Wall Street.

The crude oil market is still completely under the impact of Hurricane “Ida”. Persistently high production losses in the Gulf of Mexico are driving oil prices. The price for a barrel (159 liters) of the North Sea variety Brent rose by 0.4 percent to 72.80 dollars.

The normalization of production after Hurricane Ida continues to progress much more slowly than after Hurricane Katrina 16 years ago, emphasizes Commerzbank raw materials expert Carsten Fritsch.

The euro gained 0.1 percent at lunchtime to $ 1.1832. In the further course of trading, the ECB meeting is likely to cause movement in the currency pair.

The gold price has shed its early weakness and turned positive. The troy ounce of gold costs $ 1795 at noon, 0.3 percent more than the day before. The psychologically significant mark of $ 1,800, which the yellow precious metal broke down at the beginning of the week, is thus getting a little closer.

The biggest DAX winner is the Merck share, which is now approaching its record high with a price increase of currently 1.8 percent. The Darmstadt-based pharmaceutical company is more optimistic about the future and is aiming for sales of around 25 billion euros by 2025.

“In all three business sectors Healthcare, Life Science and Electronics, the course is already set for sustainable, profitable growth,” said CEO Belen Garijo on the DAX company’s capital market day. The new sales targets by 2025 are above the current consensus estimate, emphasizes JPMorgan analyst Richard Vosser.

The activist investor Enkraft Capital has joined RWE and is calling for the controversial brown coal business to be separated in order to increase the value of the share. This is well received by the market, the RWE share is the second largest DAX winner at lunchtime.

The US semiconductor manufacturer Intel wants to announce by the end of the year where it will build eight large chip factories on the European mainland by 2030. That said, CEO Pat Gelsinger of the “Frankfurter Allgemeine Zeitung”. There are currently around ten location candidates, including several in Germany. Gelsinger has therefore already met with representatives of the EU Commission and has met Chancellor Angela Merkel twice in the past three days.

The US video game retailer Gamestop posted strong business growth in the second quarter thanks to the recovery from the Corona crisis, but fell short of market expectations. Gamestop reduced the loss from $ 111.3 million to $ 61.6 million. The share fell after hours by more than eight percent.

The electric car manufacturer Tesla wants to enter the energy trading business. Tesla is currently recruiting for energy trading to support its battery and renewable energy projects, according to a job posting the company posted on LinkedIn. Tesla is already in the photovoltaic business, offering solar tiles. In addition, Tesla is building the largest solar system in the USA. The automaker also wants to market electricity in Texas.

Ex-Microsoft boss Bill Gates’ investment company will control the luxury hotel chain Four Seasons Hotels and Ressorts. Cascade Investments is taking over half of the shares of Saudi Prince Alwalid bin Talal in the chain for $ 2.21 billion. Cascade has acquired 71.3 percent of the hotel shares. The chain is valued at ten billion dollars.

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