market report
Status: 03/21/2022 09:40 a.m
After the Great Expiration Day, the search for direction in the DAX began. Now it will be shown what the recent 2100-point price rally in the leading German index was really worth.
The DAX started the new trading week with losses. At the start of trading on XETRA, the German standard values fell 0.2 percent to 14,386 points. The DAX is looking for a direction following the big expiration day. Last Friday, three types of investments expired on the Eurex derivatives exchange: options on individual shares, options on indices and futures contracts on indices.
Now that the tailwind from the futures market is fading, a decision will be made as to whether this so-called Witches’ Sabbath was a trend accelerator to the upside – or whether it will turn around to the downside.
DAX trend reversal following the Witches’ Sabbath?
The fact is: The Witches’ Sabbath has often been a fateful day for the DAX in the past. Finally, with the Great Expiry Day, a market shakeout takes place, which can certainly form the basis for a longer-term change in trend.
Many professional investors close their long or short positions on these days. No wonder that the market often forms important preliminary highs or lows around major expiration days, which are then decisive for many months.
Important DAX brands at a glance
From a technical perspective, Friday’s low of 14,110 points is now the next point of contact for the DAX bears on the underside. If the German stock market barometer also slips below that, there is a risk that the downward momentum will accelerate.
On the upside, only a jump above the previous week’s high of 15,553 points would give the German standard values new upward momentum.
Producer prices are rising at record speed
Producer prices caused new concerns among investors in the morning. The high inflation in Germany increased further in February, even before the outbreak of the Ukraine war. Producer prices rose by 25.9 percent compared to the same month last year, as reported by the Federal Statistical Office. That’s a record rise that continues to fuel inflation concerns in the market. Finally, producer prices are considered an important leading indicator for consumer prices.
Too much optimism in the DAX courses?
Meanwhile, doubts regarding the sustainability of the recent price rally are increasing. The DAX had gained more than 2100 points within less than two weeks. Much optimism was reflected in that performance – optimism that is now being severely tested by the ongoing hostilities in Ukraine.
Investors remain nervous. Investors are also wondering if Russia will make more interest payments this week. The country has $615 million in coupons this month and a $2 billion bond maturing on April 4.
Reluctance on Asian stock exchanges
A sober mood prevailed on the Asian stock exchanges in the morning. Investors also worried regarding dependence on Russian energy supplies. “Prolonged disruption to Russia’s energy supplies would significantly push up inflation and add to already severe pressures on US consumers’ purchasing power,” warned Bruce Kasman, chief economist at JPMorgan. He added that this would likely plunge the euro zone into recession.
The Shanghai Stock Exchange closed up 0.1 percent. The index of major companies in Shanghai and Shenzhen has been flat. The Hang Seng in Hong Kong lost 1.2 percent. The Japanese Stock Exchange was closed today for a holiday.
Bargain hunting on the Nasdaq
Positive signals for stock trading in Europe come from Wall Street. All three US indices closed in positive territory on Friday. Above all, tech stocks were in demand. The Dow Jones index of standard values closed 0.8 percent higher at 34,754 points. The tech-heavy Nasdaq advanced 2.1 percent to 13,893 points. The broad S&P 500 gained 1.2 percent to 4463 points.
“The bottom seems to be in, the tech sector is down so much from its highs that it’s bound to attract people looking for opportunities,” said strategist Rick Meckler of Cherry Lane Investments.
Oil prices continue to rise
However, the rising oil price is worrying investors. A barrel of North Sea Brent will cost $111.44 in the morning, up 3.3 percent on Friday’s closing price.
EU speculation on an embargo on Russian oil is driving up energy prices once more. Added to this is a renewed attack by Yemeni Houthi rebels on oil facilities in Saudi Arabia, said analyst Jeffrey Halley from brokerage house Oanda.
The euro edged up slightly to $1.1049 in early trading. An ounce of gold costs $1,925.
Daimler Truck and Hannover Re in the DAX
Today Daimler Truck takes off in the DAX. After the truck manufacturer, which was spun off from the former Daimler group in December, was included in the MDAX in February, it was promoted to the first stock exchange league at the beginning of the week. As of today, the shares of the insurer Hannover Re are also listed in the DAX. Beiersdorf and Siemens Energy have to make way.
RTL, Sixt and Siltronic new in the MDAX
The media group RTL, the car rental company Sixt and the wafer manufacturer Siltronic are all climbing up the MDAX. The special software provider Compugroup, Hella, which belongs to the car supplier Faurecia, and the car dealer Auto1 have to make room for this. The IT service provider Adesso is new to the DAX family and is moving into the SDAX, displacing the online fashion retailer Global Fashion Group.
VW plants in Northeast China are still at a standstill
Volkswagen has had to extend the production stop at three plants in the northeast Chinese metropolis of Changchun until Tuesday due to the corona lockdown. A VW plant, an Audi plant and a component plant are affected. All three are operated together with the Chinese partner FAW.
Salzgitter warns of risks from the Ukraine war
The Salzgitter steel group is warning of the consequences of the war in Ukraine for business development. Russia’s attack on the neighboring country and its consequences might lead to an abrupt slowdown in economic recovery. This is accompanied by the risk of a further increase in the already very high energy costs. “Therefore, there are currently hardly any quantifiable forecast risks,” explained the Executive Board.
CFO Mucic told SAP Adieu
Europe’s largest software manufacturer SAP has to look for a new CFO. The previous CFO Luka Mucic will leave the company at the end of March 2023, the DAX group announced. Both sides had mutually agreed on this. Until then, Mucic will continue to work in full.
Porsche SE wants to pay out more dividends to shareholders
The major VW shareholder Porsche SE wants to pay its shareholders more dividends for the past year. According to the DAX company, a dividend of EUR 2.56 per preferred share is to be paid out for the past financial year, following EUR 2.21 for 2020. Common stock holders are to receive EUR 2.554 for each certificate held.
No Obstacles to Tesla Factory Launch
According to the Brandenburg state government, Tesla’s electric car factory in Grünheide near Berlin can start as planned on Tuesday. “Currently, we have no knowledge that would prevent it from being put into operation,” said the spokeswoman for the Ministry of the Environment, Frauke Zelt, on Saturday.
Oil company Saudi Aramco doubles profit
Oil company Saudi Aramco more than doubled its profits last year thanks to the strong recovery in oil prices. The surplus rose to $110 billion in 2021 from $49 billion a year earlier, the Saudi industry giant announced on Sunday. According to data from the Bloomberg news agency, Saudi Arabia holds around 94 percent of the shares in Saudi Aramco.
