The negative signs are increasing: According to a study, the Germans will put more money on the high edge this year. The savings rate is expected to climb to 12.5 percent this year from 10.9 percent in 2019, the economists at DZ Bank calculate. That is the highest private savings rate since 1992.
According to DZ Bank, uncertainties about job security and income prospects in particular contribute to a greater propensity to save. In return, consumption will shrink accordingly.
For example, less durable consumer goods such as cars would be bought. Private consumption in Germany is likely to fall by 2.8 percent, which would be the worst slump since reunification. The slump in consumption increases the proportion of savings in disposable income.
Overall, the disposable income of private households is expected to shrink by 1.1 percent this year, according to the DZ Bank experts. That would be the first decline since the 2009 financial crisis.
And according to the VDMA industry association, machine builders in Germany are increasingly feeling the drop in orders due to the corona crisis. In mid-April, 89 percent of the companies surveyed said they were affected by the effects of the pandemic. Overall, 45 percent of the companies report noticeable, 32 percent of those surveyed even serious order losses or cancellations.
As a result, the prices of cyclical stocks in particular are slipping. Daimler leads the list of losers with a minus of around 2.6 percent, as does the supplier Continental. In return, shares in non-cyclical companies such as the medical technology group Fresenius Medical Care (plus 3.2 percent) and the reinsurer Munich Re (plus 2.5 percent).
Investor sentiment is currently “wait and see neutral”, the possibility of a continuation of the recovery rally is limited in the short term, the risk of a setback is greater. This can also be seen in the current evaluation of the weekly Handelsblatt survey Dax-Sentiment.
Because surprisingly, the investment rate of investors is again at a relatively high level. This can also be seen from the overbought condition of the US selection index S&P 500, which rose too quickly after the price slump.
The insider barometer shows a similar picture, which analyzes the trading of Germany’s board of directors and supervisory boards in the shares of their company. Because with the recovery on the stock markets, insider buying has decreased.
The executives, who know their companies better than anyone else, go bargain hunting if they think their company’s shares on the stock market are undervalued. That is no longer so clearly the case.
Olaf Stotz, a professor at the Frankfurt School of Finance & Management, would only be able to support a new, larger rush of directors and supervisory boards to buy shares in their own companies Dax-Stands around 8500 points expected.
Look at individual values
Deutsche Bank: Germany’s largest money house is preparing for higher credit risks in the wake of the corona crisis. Actually, CEO Christian Sewing had promised a black zero in operating profit for 2020 after a billion minus in the previous year.
However, analysts now expect the bank to face a loss of around two billion euros. The share is down 1.8 percent.
Ceconomy: The restrictions on public life cause Saturn / Mediamarkt’s mother to plummet sales and lose quarterly. These numbers come as no surprise, a trader said. Nevertheless, the share of the electronics retailer loses 3.6 percent.
Philips: The Dutch medical technology group posted a significant drop in profits in the first quarter due to the virus crisis. Philips cited a drop in demand for electric toothbrushes, shavers and other health products as a result of the virus crisis as the reason for the decline. However, the share price rose 5.9 percent.
Look at other asset classes
The fall in oil prices cannot be stopped: In the afternoon, a barrel (159 liters) of the North Sea Brent cost $ 26.73, down 4.9 percent. The price of a barrel of the American grade WTI dropped temporarily by around 40 percent to around eleven dollars, the lowest level in 21 years.
While the slump in demand due to the corona crisis continues, concerns have recently increased on the US market that the oil deposits there may be reaching their capacity limits.
The slump in prices for US oil has thus amounted to almost 75 percent since the beginning of the year. Concerns about crude oil storage caused prices to plummet compared to North Sea oil, where discounts last year were 68 percent.
As market watchers from the Australia & New Zealand Banking Group reported, inventory levels in Cushing, Oklahoma, have increased by a whopping 50 percent since the beginning of March. “We still have hope of a recovery at the end of the year,” said the experts.
The EU summit on Thursday with the discussion on corona bonds has already on Monday impact on the bond market. The yield spread between German and Italian government bonds continues to increase and is now 2.32 percentage points. The yield on ten-year bonds is currently approaching the monthly highs reached last week at 1.940 percent.
This “spread” has become a kind of fever curve in the Italian economy. This risk premium reached a record level of 3.3 percentage points in 2018 when the EU Commission rejected the draft budget for the second time in November.
“Residential properties could emerge from the crisis as winners”
In any case, the Italian bond market is facing another test at the end of the week when S&P Global reviews Italy’s BBB rating with a negative outlook.
What the chart technique says
Corrections within the overall trend very often end at the 50 percent mark. Currently related to the Dax, this means that the downward trend has so far been from the record high in mid-February at 13,795 points to the low point in mid-March at 8255 points.
The 50 percent mark is accordingly at 11,025 points. With the increase to 10,820 points last Tuesday, the index of this brand has already approached.
Should the Frankfurt benchmark break this 11,025 point mark, the next resistance would be at 11,266 points, the August 2019 interim low.
The important resistance zone is in the range of 10,279 to 10,391 points. From the first-mentioned brand, the leading index started its rally in December 2018, which continued until a record high in February 2020. The brand was “confirmed” last Tuesday because the index ended trading right there.
Just below that there are so-called price gaps for which there were no quotes this year. The last gap would be closed at a Dax level of 10,097 points.
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.