Dusseldorf The Dax kicks off Tuesday with momentum. In morning trading, the German stock market barometer is up 5.2 percent with 9191 counters. All 30 DAX values are positive, Infineon paper increases by more than 11 percent. Shortly after the opening, the stock market barometer even stood at 9283 points. But according to many experts, this should only be a relief rally – a countermovement in the current, still intact downward trend.
After a roller coaster ride, the German leading index ended yesterday’s Monday with a minus of 2.1 percent and a final score of 8741 points. It was a volatile trade with a difference of almost 600 points between daily high and low.
A burden was the significant minus on the US stock markets on Monday. The Dow Jones lost about three percent, despite the huge aid program from the US Federal Reserve. An unlimited bond purchase program and various liquidity and credit programs – there is not much more.
The persistent reaction in the US Senate over the government’s aid program was probably responsible for the still subdued reaction on the US stock exchanges.
At least the stock exchanges in Asia rose significantly on Tuesday, the Nikkei index even more than seven percent. There, the corona virus is already under control in many countries. The Chinese government plans to partially lift the exit restrictions in Wuhan after more than two months after the infection rate is said to have practically dropped to zero.
Things look different in Europe: The British government also imposed a curfew on Monday and the Italian government wants to close all non-essential companies. If the rest of Europe and the United States flourished, much of the global economy would be severely hampered in the near future. “I would not be surprised if the markets quickly switch back to risk-off mode with this implementation,” says Commerzbank analyst Thu Lan Nguyen.
According to investor sentiment, such trading days with clear plus signs are currently only a countermovement in the existing downward trend. Investors should at least wait for this countermovement in order to then say goodbye to unpleasant stocks in the portfolio at higher prices and thus suffer less loss, recommended sentiment expert Stephan Heibel on Monday of this week. After evaluating the Handelsblatt survey Dax-Sentiment, he commented: “Investors should still have enough cash in reserve to remain able to act in the event of a further sell-off wave.”
With his second advice that investors can now buy shares in solid companies again, Heibel is not alone. Well-known fund manager Bert Flossbach expects a deep and sharp recession, but is already buying shares again. “My plan is: slowly increase the equity quota with quality stocks, gradually dissolve hedges, reduce cash,” says the co-founder of the asset manager Flossbach von Storch, who manages the popular “Multiple Opportunities” fund.
Look at other asset classes
The gold price is rising again. After gaining 1.4 percent on Monday, it rose another 2.3 percent to $ 1,588 in early trading. In the two weeks before, the price had dropped by around ten percent. Is the scenario of the financial crisis repeating itself?
The price of the precious metal also fell initially twelve years ago because investors needed cash and had to sell many positions. Then followed a year-long rally to a record high of $ 1921 in 2011. The purchase of gold has apparently also reached private investors due to the current crisis. Bars are currently in short supply.
The Federal Reserve’s Comprehensive Aid Program has a significant impact on the foreign exchange market. The “safe haven” dollar gave way on Tuesday morning. The dollar index, which reflects the price of major currencies, fell 1.2 percent to 101,279 points, heading for the biggest daily loss in three and a half years. In return, the euro gained one percent to $ 1.0829.
The weaker dollar, in turn, fueled the oil price. A North Sea barrel of Brent climbed 4.2 percent on Tuesday to $ 28.18. US light oil WTI cost around 5.3 percent more at $ 24.6 per barrel.
Look at the individual values
Nordex: Full order books drive the wind turbine builder’s share price. The paper gains 17 percent. The board hopes for strong growth in sales and profits in 2020 despite the corona crisis.
Cancom: The IT service provider has revised its provisional sales and earnings figures for the past year downwards due to a change in the accounting. In connection with the first-time review of the annual financial statements by the new auditor KPMG, there were reclassifications in the sales statement. As a result, consolidated sales are expected to be 1.55 billion euros in 2019. In February the company released preliminary sales of 1.64 billion euros. That is why the share loses 0.3 percent in a friendly market environment.
Rational: In view of the corona crisis, the hospital chain is facing a difficult financial year. The Rhön clinic locations are organizationally and medically prepared for the increasing number of corona patients, the company said. However, the economic impact of the crisis on the company – which also includes the Gießen-Marburg University Hospital – cannot yet be assessed. After a friendly start to trading with a gain of almost ten percent, the stock is now 3.3 percent in the red.
What the chart technique says
The technical analysts at Düsseldorf’s HSBC were right. They had forecast that the range between 8255 points – the lowest point of the crash since mid-February 2020 – up to around 8000 points offers stable support. The market was oversold, so it fell too quickly too quickly, and was therefore ripe for a countermovement, the chart technicians said.
“Normal” stock market conditions will only be possible again if the Dax can break the 10,279 point mark. This number comes from December 2018 and was the starting signal for the rally, which lifted the leading German index to new record highs.