According to experts, the war in Ukraine is also leaving its mark on the stock exchanges in the new trading book. The economic optimism from the beginning of the year has completely subsided, says analyst Jochen Stanzl from the online broker CMC Markets. “Since Russia’s invasion of Ukraine and an accelerating spiral of sanctions with Russia’s almost complete isolation from the West, the risk of a recession has replaced the previous boom scenario in just a few weeks.”
The greatest burdens are threatened by secondary effects, warns portfolio manager Andrew Smith from asset manager Threadneedle. Rising energy prices squeezed consumers’ disposable incomes and pushed up business costs. These would also have to contend with aggravated supply problems.
Another economic risk is the expected interest rate hikes, warns Peter de Coensel, head of asset manager Degroof Petercam. “Central banks have decided to maintain their anti-inflation credibility literally ‘at all costs’. Even if the risks of a recession increase and materialise.” In the US, investors are mostly expecting the Fed to hike by half a percent at its next meeting in early April, twice as much as in mid-March. Council member Frank Elderson at the European Central Bank (ECB) is not ruling out an interest rate hike in the current year.
Against this backdrop, equity investors are paying increasing attention to bond yields, particularly in the US. There, two-year bonds are currently yielding almost as much at 2.15 percent as ten-year bonds, which are yielding at 2.35 percent. If the yields on the shorter-dated securities exceed those on the longer-dated ones, experts speak of an “inverse yield curve”. It is seen as a sign of an approaching recession.
Since this usually only occurs with a delay of a few months, a “catastrophe boom” cannot be ruled out by then, says CMC expert Stanzl. Because until the actual recession, economic data that are above the low expectations might lead to price jumps. In the past week he gave Dax more than half a percent. However, in the previous week it had increased by almost six percent, more than it had in a year and a half. Investors had stocked up on shares once more because the stock markets had slipped at the beginning of the month due to the Russian invasion of Ukraine. The leading index is likely to be followed by further premiums at the start of Friday’s slight gains: it is currently estimated to be almost 90 points higher at 14,395 points.
At the beginning of the week there are only a few events on the agenda that will affect the share price: following Daimler Truck, competitor VW Commercial Vehicles will present the annual report. The German Protection Association for Securities Ownership (DSW) provides information regarding the watch list and the future of the general meeting in the post-corona period.
