Get 40% Off
These stocks are up over 10% post earnings. Did you spot the buying opportunity? Our AI did.Read how

DAX Between Bear and Bull Trap as Swing Market Continues

Published 03/10/2023, 09:15 AM
Updated 07/09/2023, 06:31 AM

While the DAX was able to decouple itself from a falling Wall Street in the first half of the week, as it had so often before, by Friday morning at the latest, before the US labor market data and after the price plunge of a start-up financier from Silicon Valley, the composure in Frankfurt was over.

The pull from New York was too great for investors in this country to ignore. Because on both sides of the Atlantic, even after the two hearings of US Federal Reserve Chairman Powell, people were not any wiser about how far and how fast key interest rates will rise in the USA in the coming months.

And if share prices fall, as they did at the end of the week itself, extreme caution is called for when bond market yields come back. It could be that many investors now pull the plug on the stock market and choose the attractive alternative of high-interest rates in the bond market.

The US labor market again creates more jobs than expected

At 2:30 p.m., the eagerly awaited US labor market data were published. After more than 500,000 new jobs were created in January, 311,000 jobs were created in February, significantly fewer than in the previous month. But firstly, it was more than expected, and secondly, too much to signal to the Federal Reserve that the danger of a wage-price spiral has been averted.

After the data showing a still robust US economy, fears of a renewed acceleration of the interest rate hike cycle to 50 basis points are circulating. On the other hand, the significant rise in interest rate expectations in recent weeks also offers plenty of potential for easing, should the US Federal Reserve not allow itself to be ruffled and diverted from its course at its next meeting on 22 March.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Adidas with more problems than solutions

The Adidas AG (ETR:ADSGN) ADR (OTC:ADDYY) share was also in focus this week. The sporting goods manufacturer is cutting its dividend by almost 80 percent. The main reason is the ongoing problems in China, the production country of many products and the largest sales market for the sporting goods manufacturer.

And then the break-up with rapper Kanye West has left a significant hole in the balance sheet. The products from the Yeezy collection alone, which are no longer being sold, will be written off by 500 million euros if no other use is found. So things are not looking good for the share, and for investors, there is currently very little to be said for a long-term commitment.

SAP with an attractive offer

SAP has received an attractive offer for its subsidiary Qualtrics. Silver Lake's US investment company wants to pay 18.15 US dollars per share. This values the company at 12.4 billion dollars. This means that SAP would receive about 8.8 billion dollars for the 71 percent share, which is 800 million euros more than the Walldorf-based company paid for it four years ago. Never having taken off and arrived in the SAP Group, the separation also offers shareholders the advantage, beyond the short-term gain, that SAP can and will now concentrate fully on its core business and on tapping the growth potential in the cloud.

US inflation data on Tuesday

Still sniffing the air above the 15,700 mark on Tuesday, the DAX had to interrupt its journey toward an all-time high. This means that there is no danger from a chart perspective. This is because a double top has formed, which in the best case, only acts as resistance on the way up and allows the market to remain in front of it.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

However, it is also possible that the journey down from here will soon turn into a more substantial correction. The decision on this could come as early as next week when the US inflation data for February are published on Tuesday. A slight decline is expected in both the overall and core rates. The figures are also the last big data set in the Fed's collection for its meeting the following week.

DAX - current supports and resistances

Supports: 15,300/15,250 + 15,200/15,150 + 15,050/15,000

Resistances: 15,550/15,600 + 15,700/15,750 + 15,800/15,850

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.