Ring the Lunchtime Trader
Yesterday's earnings have been reportedly disclosed by Dax
Let's dive into the fray of midday market happenings, where the Dax, a German powerhouse, is seizing the spotlight once more. New year, same struggle - the much-coveted 20,000 point milestone remains a hurdle hard to clear. Hampered by a 0.5% plunge, the Dax stood firm at 19,924 points, with the MDax and Euro Stoxx 50 sharing the same fate, dropping 0.4% and 0.6% respectively.
As rumors swirl about our dear President Trump's inauguration, investors find themselves standing at the precipice. Will they take the plunge, or wilt under pressure? CMC Markets' resident guru, Jochen Stanzl, weighs in, "The Dax is battling to find those fervent buyers who can propel the index reliably above the 20,000 mark."
The volatility clock is ticking. Market speculators are keeping a keen eye on sectors supposed to bloom under Trump’s rule. However, a poisoned chalice lurks nearby, as increased tariffs elsewhere could rekindle inflation, posing potential threats to corporate giants. In Stanzl's words, "Historically, protectionism has been a recipe for market chaos."
Martin Utschneider, our chart Expert-Extraordinaire of Finanzethos, has examined the Dax's trajectory since its year-end rally came to a screeching halt in mid-December. He suggests market watchers to stay vigilant while the consolidation phase persists. "The Dax is in an upward trend in the long run, but short-term supporters at 19,926 points are the lifeblood that keeps it going."
RWE, the perennial people's champ of the Dax, reveled in a 1.9% victory, buoyed by the restoration of hope in the battered energy sector. The stock had already drawn much attention on the previous day, a promising indication for the struggling sector which struggled to hold onto 70% of its value last year.
Deutsche Telekom shares also swelled, boosted by ongoing share buybacks, as part of the €2 billion program that was announced back in October. The first tranche has now begun to be bought.
Alas, it wasn't a good day for Airbus and MTU. Airbus, following its meteoric rise the day before, tumbled by about 1%, due to reports of missed delivery targets in 2021. The news hit MTU even harder, tumbling by 1.7%.
German automakers continue to face scrutiny, with no ray of hope in sight. The specter of electric vehicles losing eligibility for tax credits in the US looms large, further dampening investor interest.
Meanwhile, currency wars took a turn for the worse, as the euro weakened yet again, paring the difference between it and the dollar with every passing day. On Thursday, the euro touched a six-month low of $1.0288, with little movement observed on Friday.
Analysts attribute the dip to the belief that the U.S. economy will continue to outshine the Eurozone, coupled with the expectation that the Federal Reserve will scale back its rate cut pace this year. The weak euro, however, might bring some silver linings for European consumers, with cheaper imports potentially boosting retail and pharma sectors.
- "The Dax's struggle to surpass the 20,000 mark is not new, as it fell 0.5% on the day, resulting in a standing at 19,924 points. This volatility is a cause for concern for some market watchers, who have warned that increased tariffs could rekindle inflation and pose threats to corporate giants."
- "Investors looking to the finance sector may want to be cautious about investing in the stock-market right now, as the Dax and other indices are experiencing significant volatility due to factors such as tariffs and geopolitical events like President Trump's inauguration."
- "Analysts have been monitoring the benchmark Dax, as it has shown signs of instability since its year-end rally came to a halt in mid-December. Jochen Stanzl, CMC Markets' resident guru, has warned that historical precedents suggest protectionism could lead to market chaos."
- "The recent weakness of the euro, which touched a six-month low of $1.0288, is a concern for some, as it could indicate a stronger U.S. economy and a more aggressive Federal Reserve. However, this could also bring benefits to European consumers, as cheaper imports could boost the retail and pharma sectors."
