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Dax closes in plus after Fed rate cut

Dusseldorf With a relief rally the Dax the sell-off mood on the markets ended on Tuesday. It closed around one percent in plus at 11,985 points.

In the afternoon, the German benchmark index temporarily rose to a daily high of 12,272 points after the US Federal Reserve surprisingly announced that it would lower the base rate by 0.5 percentage points to a range of one to 1.25 percent. But a short time later, the Dax gave up the additional profits within a few minutes and then quoted significantly lower than in the morning. The US markets reacted similarly: shortly after the Fed announcement, the prices of the major indices rose sharply, but fell during the speech by Fed chief Powell.

US bank stocks in particular came under pressure. Lower interest rates could on the one hand provide more stability in the markets, on the other hand they lead to less interest income.

The major US stock indices stabilized on Monday after their crash last week. The Dow Jones alone had grown more than five percent on Monday. The Asian markets also saw significant price increases.

Therefore, the relief rally on the German stock market came as no surprise on Tuesday. In such a rally, investors do not buy out of long-term conviction, but are happy that the sell-off has stopped.

Because an extremely large number of investors have sold out of panic in the past week, few buyers are enough to ensure higher prices. But these investors are also likely to part with their papers quickly when prices slide again.

The best example is the rally at Lufthansa-Share this Monday, which was up more than eight percent by the close of trading. The paper had lost 30 percent of its value in the past ten trading days due to massive sales. Now the first buyers, who get back on board, caused a real explosion of prices.

Accordingly, investors should allow for another price slide after this relief rally. “A countermovement later this week should not be the end of the correction,” says Stephan Heibel after evaluating the latest Handelsblatt survey Dax-Sentiment. The owner of the analysis house Animusx had also forecast a sellout in the markets around ten days ago.

But a so-called “dead cat bounce” is unlikely to happen, a small interim recovery, in which the downward trend then continues. The name “Dead Cat Bounce” is based on the idea that even a dead cat jumps up if it falls quickly enough from a height.

Because there are currently many shares on the German stock market with a high dividend yield, especially in the Dax there are many reliable dividend payers. There are few investment alternatives for such high dividends. For example, the yields of all German government bonds are in the red.

This advantage of dividends over other investment opportunities should prevent another price slide. Here is an overview of the shares of those companies that have not reduced their dividends for at least ten years – and that also convince with high dividend yields.

Look at the individual values

Aviation: Investors were particularly keen on aviation stocks that had come under pressure in recent weeks due to travel restrictions related to the coronavirus epidemic. Lufthansa titles were up around eight percent in the late afternoon. Air France and Easyjet papers also picked up.

Beiersdorf: Investments in new products and acquisitions have reduced the operating profit of the consumer goods group. For the current year, the Dax Group is once again aiming for an increase in sales in a range between three and five percent. The operating return on sales is expected to be at the previous year’s level of 14.5 percent. The prognosis does not take into account the effects of the spreading coronavirus.

CEO Stefan De Loecker made it clear, however, that he expected increased headwind in the business. The shares gained 0.41 percent.

Hello Fresh: The share certificate rose by more than three percent. Because the food delivery service also expects profitable growth in 2020. Currency-adjusted sales are expected to increase by 22 to 27 percent. In 2019, the company posted a jump in sales of over 40 percent to 1.8 billion euros.

Kion: The forklift manufacturer continues to expect good business in the current year and expects a moderate increase in sales. However, the effects of the corona virus have not yet been included. Due to the booming online trade, the market dynamics in the supply chain solutions division should continue. The MDax Group’s shares rose 1.9 percent.

Qiagen: The biotech company Qiagen is now to be taken over by the US laboratory supplier Thermo Fisher Scientific. Accordingly, Thermo Fisher is all Qiagen– Make a public takeover offer to shareholders and offer EUR 39 per share. Accordingly, the share rose quickly by 21 percent to EUR 38.62, just below the takeover bid.

But in the meantime there were the first sales: In the early evening the paper was only 16.7 percent up at 37.14 euros. Qiagen valued the offer at EUR 10.4 billion. The offer price includes a premium of approximately 23 percent on the closing price on March 2.

What the chart technique says

After the turbulent trading week with a minus of 12.4 percent, the analysts of Düsseldorfer Bank HSBC looked at the Dax history. Since 1988, investors have had to accept double-digit price losses only six times.

The absolute “worst case” was the week of October 10, 2008, when the German standard values ​​fell by more than 21 percent. The good news: With one exception in August 2011, there was a significant recovery within two weeks of such a “hard stop”.

Nevertheless: It is extremely important that the Dax defends the support level at 11,800 points. The leading German index fell below this range on yesterday’s trading day, but was well above it at the close of trading. On the upper side, the closing of the recent downward price gap last Friday has provided initial stabilization.

Such downward price gaps arise when the daily low of the previous day is above the daily high of the subsequent trading day. Last Thursday’s low was 12,208 points, Friday’s high was 12,212 points. According to chart technology, such downward price gaps are an important resistance, which was overcome today with a daily high of 12,224 points.

Handelsblatt analysts Check: JP Morgan raises the price target for Deutsche Börse shares

The US bank JP Morgan upgraded Deutsche Börse’s stock from “Neutral” to “Overweight” and raised its price target from EUR 145 to 155. Analyst Gurjit Kambo sees the exchange operator as the beneficiary of the increased fluctuations in the market. In a study available on Monday, he raised his estimates for this year’s earnings per share, reflecting the stronger trading volumes so far this year.

A total of 25 studies in the Handelsblatt analyst check deal with Deutsche Börse shares. The council “hold” is facing eleven purchase recommendations eleven times. Two analyzes recommend selling the paper. The weighted price target for all analyzes is € 153, which is above the current price of around € 147. With a weighted price target, recent studies have a higher impact.

“When planning wealth, the rule is: never get out completely!”

Here is the page with the Dax Course, here is the current tops & flops in the Dax, current short sales of investors can be found in our Short sales database,


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