Just like a week before, on Thursday, when looking at the DAX, it was again a case of: hold your breath and keep calm! Then, as an investor, you had initially done everything right. Because no sooner had the swan song of the 30 percent rally in the DAX been sung than buyers came into the market again and catapulted the index back above the support at 15,250 points.
The DAX remains a stalwart and seemingly immune to further high inflation and rising interest rates. Investors are positioning themselves for the moment when the mood on Wall Street turns and the necessary tailwind from New York could also drive the DAX to new highs for the year. Nevertheless, one should be warned against this optimism, which has often been a breeding ground for a stronger correction.
Stock market traffic light turns yellow
Even the second turnaround does not change the fact that the traffic light for the DAX is now yellow. It will turn red if the index cannot hold the 15,000 mark either. The topic these days remains stubborn inflation. The statisticians' data on German inflation, which stagnated at the level of 8.7 per cent in February, were followed by figures and outlooks from the chemical companies Covestro, Merck and Evonik.
All three warned in unison against high inflation, the increasing cost pressure forced them to make disappointing forecasts for the current year. In terms of monetary policy, the constantly high inflation and the associated fear of further increases and longer high interest rates have long since replaced the optimism of interest rates already falling again this year.
Bonds become competition for stocks
There are still almost three weeks until the next US Federal Reserve meeting - a damn long three weeks until investors get a little more clarity on how the Fed interprets the latest strong figures on the US economy. Until the decision on the next interest rate step is made on 22 March, the market can speculate about its level.
And here the pendulum has swung more and more in the direction of another larger step of 50 basis points in recent days. Until then, there is uncertainty, which is poison for the market. And the alternatives to stocks with interest rates of four or almost five percent for ten or two-year US government bonds are increasingly putting themselves in the shop window without risk.
German shares in demand overseas
One reason why the DAX has been able to hold its own so surprisingly well against the pull of falling prices on Wall Street could also be that US investors themselves no longer believe in their own shares, but are increasingly going on a buying spree in Europe. In the past few days, for example, companies such as Munich Re, Allianz (ETR:ALVG) and Adidas (OTC:ADDYY) increasingly saw profit-taking in the morning after good figures. In the second half of the day, all these shares largely recovered their losses. This speaks for strong interest from overseas at more favourable entry prices.
And as if inflation were not enough of a problem for the stock market, the clouds over relations between the USA and China are now darkening more and more. On the one hand, there are the smouldering discussions and accusations about the origin of the corona virus and, on the other hand, the latent danger of sanctions in the event of China supporting Russia with arms deliveries. Here, a small spark can ignite an economic war between the two largest economies at any time, with corresponding consequences for the global stock markets.
Labour market data from the USA with a delay
For a change, the labour market report from the US comes on a second Friday of the month. And that can be exciting. The latter figures from January are probably still very much on investors' minds. The more than 500,000 new jobs created were the prelude to a whole series of other indicators that showed a robust US economy with persistent inflationary pressure and no signs of recession at all that could prompt the central banks to slow down. The question now is whether the start of the year was just a blip due to the relatively mild weather in the US or whether a consistently robust labour market will inevitably set in motion the wage-price spiral that will keep inflation and thus interest rates high for a long time to come.
DAX - current supports and resistances:
Supports: 15,300/15,250 + 15,200/15,150 + 15,050/15,000
Resistances: 15,450/15,500 + 15,600/15,650 + 15,800/15,850