Status: 06/17/2022 07:48
Global equity markets are heading into their worst week since the March 2020 pandemic crash. A countermovement is emerging in the DAX after yesterday’s crash.
The DAX is expected to start on the last trading day of the week with a premium. The IG broker rates the 40 German standard values 1.1% higher at 13,176 points. The day before, the German stock exchange barometer had taken heavy losses in the face of massive recession fears and investors’ interest rates. The DAX tumbled on Corpus Christi 3.3% to 13,038 points.
DAX is massively impressed
However, the price gains that are emerging in the DAX are likely to be primarily a technical countermovement, i.e. a reaction to previous price losses. From a technical as well as a fundamental point of view, the main German index remains seriously affected.
Meanwhile, even the most loyal equity bulls need to realize that high inflation rates and central bank responses to them pose a serious threat to the global economy and corporate profits.
Central banks, which have hesitated too long, are now forced to react harder to have any chance of curbing runaway inflation. An economic slowdown, even a recession, is imminent.
How the SNB shocked the markets
In the middle of the week, the Fed raised interest rates by 75 basis points, the largest rate hike since 1994. Yesterday the Bank of England (BoE) and the Swiss National Bank (SNB) followed suit with hikes of rates. It was the SNB’s sharp 0.5 percentage point rate hike in particular that shocked investors and caused a sell-off on the stock exchange.
“It was probably the SNB that broke the camel’s back, because if the Swiss are worried about inflation, then we all should be,” Oanda analyst Jeffrey Halley said in the morning.
Clearance on Wall Street
In this context, yesterday the panic also spread to Wall Street. The US Dow Jones standard value index closed down 2.4% at 29,927 points on Thursday. The high-tech Nasdaq fell 4.1% to 10,646 points. The large S&P 500 lost 3.3% to 3666 points.
US Treasuries also flew out of portfolios, bringing the yield on 10-year T-bonds back to a recent 11-year high of 3.625%.
“The Fed’s rally is fading as investors question the Fed’s ability to achieve a soft landing for the economy,” said Peter Cardillo, chief economist at investment firm Spartan. Therefore, the stock market has not yet hit rock bottom.
Nikkei with losses
Wall Street’s negative specs weighed on Asian exchanges at the weekend. The Japanese Nikkei index, which includes 225 values, is 1.4% lower at 26,056 points about half an hour before the end of trading in Tokyo. The Shanghai stock exchange, on the other hand, recorded a slight increase and gained about 0.3 percent.
The Bank of Japan remains slack
The Japanese central bank countered the global trend towards monetary tightening in the morning. Short-term interest rates must remain at minus 0.1 percent and long-term interest rates around zero. In addition, the Bank of Japan continues to buy government bonds and stocks.
Euros still above $ 1.05
The euro recorded slight losses in early trading. The European common currency is currently trading at $ 1.0528, but can thus remain well above the $ 1.05 threshold it regained only yesterday. An ounce of gold costs $ 1846.
Bitcoin keeps an eye on $ 20,000
Investors’ flight from risky investments has also had a huge impact on cryptocurrency markets recently. “Bitcoin found buyers above $ 20,000 again overnight, but this morning it remains uncomfortably close to the danger zone at $ 20,700,” said brokerage analyst Halley Oanda.
Porsche terminates deal with US plaintiffs
In the DAX, the focus is on the VW share in the morning. The Porsche subsidiary has reached an agreement to settle the civil actions in the lawsuit over allegedly misleading information about the fuel consumption of hundreds of thousands of cars in the United States. According to court documents, Porsche will pay US car owners at least $ 80 million as part of the deal.
Investor Dogecoin is suing Musk, Tesla and SpaceX
Tech billionaire Elon Musk and his companies Tesla and SpaceX have been sued for losses incurred with the crypto speculation object Dogecoin. US investor Keith Johnson accuses Musk and his companies of being part of an illegal Ponzi scheme that raised the price of Dogecoin and then collapsed. Johnson is seeking a class action lawsuit for anyone who has wagered money with Dogecoins.
Musk wants to have a say in Twitter’s functionality
After a Twitter acquisition, Elon Musk also wants to get involved in the service’s product development. In a video conference with Twitter employees, Musk said he assumed employees would listen to his suggestions for features. Among the product ideas Musk mentioned yesterday was, for example, withdrawing money for today’s free user verification. He also confirmed his intention to combat automated bot accounts.