2023/02/15 (171.034) Technical Analysis

Our German DAX Index Is A Powerhouse!
The DAX Future Is Trading Above 15000 Points…

Fear of interest rates does not prevent Dax from rising

Robust US economic data and the associated concerns about further rising interest rates did not stop the Dax on Wednesday. The leading index closed up 0.82 percent to 15,506.34 points. The high for the year reached last week is gradually approaching again. Even a somewhat weaker Wall Street did not slow down the German stock market in the middle of the week. The MDax for medium-sized companies also picked up and, with growth of 1.13 percent to 28,651.03 points, performed slightly better than the Dax.

With high price gains, papers from the SDax small-cap index in particular stood out on the market, which rose by 1.24 percent. Ceconomy, for example, gained 11.6 percent, fueled by takeover fantasy. The “Handelsblatt” had reported on a possible merger, citing financial circles from talks between the electronics retailer and the French retailer Fnac Darty. Behind Ceconomy, Elmos closed 10.4 percent higher. After a record year, the semiconductor manufacturer was much more confident about 2023 than expected on the market. After a buy recommendation from Hauck & Aufhäuser, the shares of the connection technology specialist Norma gained almost as much as Elmos. The shares of the Internet service provider and telecom group United Internet posted a price premium of 5.3 percent at the top of the MDax after the announcement of share buybacks. At Lufthansa and Fraport, an IT failure due to a cable breakdown, which temporarily paralyzed air traffic at Frankfurt Airport, initially dampened the mood. After numerous flight cancellations and delays, Lufthansa has now started to restart its computer systems. From the trade, their papers were hardly changed in percentage terms. Fraport closed about 0.6 percent tighter. At the top of the Dax, the shares of the engine manufacturer MTU recovered from their previous day’s losses with plus 4.1 percent. Brenntag gained 3.7 percent after Citigroup issued a buy recommendation on the chemicals retailer.

The EuroStoxx 50 rose 0.97 percent to 4280.04 points on Wednesday. For the French Cac 40 things went up a little more clearly. The British FTSE 100 climbed above the 8000 point mark for the first time and closed just under it with a plus of 0.55 percent to 7997.83 points. In New York, the Dow Jones Industrial was moderately lower at the close of the European stock market, and the technology-heavy Nasdaq 100 was hardly changed.

The euro came under pressure, falling below $1.07. Most recently, the common currency was quoted at $ 1.0671. The European Central Bank (ECB) had set the reference rate at 1.0700 (Tuesday: 1.0759) dollars in the afternoon, the dollar thus cost 0.9346 (0.9295) euros.

The British FTSE 100, on the other hand, set the next record in late trading, temporarily standing above 8000 points for the first time. It ended 0.55 percent higher at 7997.83 points. Investors can therefore continue to look ahead with good cheer, as the price development shows. This time, the trend in Europe was again stronger than on the US stock exchanges, where the Dow Jones Industrial was moderately negative at the European close.

Last But Not Least,
Let`s Get An Overview About The Most Important Economic Data
Which Drives The Dax And/Or The Other European Stock Markets Last Days

ECB Could Raise Rates Above 3.5% After Euro Area Employment Grows More than Expected And/Or Euro Approaches $1.08
The European Central Bank governing council member Gabriel Makhlouf has said in an interview with the Wall Street Journal the bank could increase interest rates above 3.5% and isn’t likely to cut them again this year since the institution moves forcefully to bring inflation back to target, as quoted by Reuters. Makhlouf has previously said he would not be surprised if policymakers kept raising interest rates beyond the end of March. Since the summer, the ECB has hiked interest rates by 300 basis points, bringing borrowing costs to the highest level since late 2008. The number of employed persons in the Euro Area rose by 0.4 percent on the quarter to 165.07 million in the last three months of 2022, the most since early 2021, preliminary data showed. It compares with market expectations of 0.2 percent and 0.3 percent in the previous period. Year-on-year, employment rose by 1.5 percent, following a 1.8 percent advance in the third quarter. The Euro strengthened to approach $1.08 in the second half of February, but remained below nine-month highs of $1.1 touched on February 1st, as investors continue to bet on a longer period of high interest rates and adjust their positions accordingly. The ECB is expected to raise key policy rates by another 50bps in March and to deliver a 25bps increase after that. The deposit rate is currently at 2.5%, but the peak rate is seen at 3.25%. Meanwhile, traders start betting interest rates in the US will need to stay high for a longer period of time. The Federal Reserve is seen delivering at least two more rate hikes. The peak rate is expected slightly higher at 5.00%-5.25% and no cuts in borrowing costs are expected this year.

German Wholesale Price Inflation at 20-Month Low
The annual wholesale price inflation in Germany eased to a 20-month low of 10.6% in January of 2023 from 12.8% in December 2022. The largest impact came from cost of solid fuels and petroleum products (13.1%). Meanwhile, wholesale prices also climbed for food, beverages and tobacco (16.2%), especially milk, dairy products, eggs, edible oils & fats (30.3%), meat and meat products (21.0%), sugar, confectionery and bakery products (20.1%), as well as for fruit, vegetables and potatoes (15.6%). On the other hand, prices for scrap & residues dropped by 21.5%. Compared with the previous month, wholesale prices went up by 0.2% in January, the first monthly increase in four months, after a 1.6% drop in December.German Current Account Surplus Slightly Up in December
Germany’s current account surplus widened to EUR 24.3 billion in December 2022 from EUR 23.8 billion in the same month last year, as the goods surplus increased to EUR 12.2 billion from EUR 8.6 billion and the primary income surplus rose to EUR 19.1 billion from EUR 18.1 billion. At the same time, the services account posted a EUR 0.3 billion deficit, compared with a surplus of EUR 1.5 billion a year ago, while the secondary income gap widened to EUR 6.7 billion from EUR 4.4 billion. Considering 2022 full year, the current account surplus plunged to EUR 145.1 billion from EUR 265.0 billion in 2021.

Germany Inflation Rate Below Forecasts
Annual inflation rate in Germany edged higher to 8.7% in January of 2023 from a four-month low of 8.6% in the previous month, but below market forecasts of 8.9%, preliminary estimates showed. Compared to the previous month, the CPI went up 1%, reversing a 0.8% decrease in December, when a federal one-off payment to cover the monthly instalment for gas and heat for all households and small- to medium-sized businesses came into effect, pressuring the inflation down. Meanwhile, the statistical office changed the CPI base year to 2020 from 2015 with the January 2023 release but the rebased figures will be available later only. That probably helps to explain why the EU-harmonized annual inflation rate moved in the opposite direction and actually fell to 9.2% from 9.6%, below forecasts of 10%. Compared to December, the harmonized CPI rose 0.5%, after a 1.2% drop in the previous month.

ECB Could Raise Rates Above 3.5% After Euro Area Employment Grows More than Expected And/Or Euro Approaches $1.08
The European Central Bank governing council member Gabriel Makhlouf has said in an interview with the Wall Street Journal the bank could increase interest rates above 3.5% and isn’t likely to cut them again this year since the institution moves forcefully to bring inflation back to target, as quoted by Reuters. Makhlouf has previously said he would not be surprised if policymakers kept raising interest rates beyond the end of March. Since the summer, the ECB has hiked interest rates by 300 basis points, bringing borrowing costs to the highest level since late 2008. The number of employed persons in the Euro Area rose by 0.4 percent on the quarter to 165.07 million in the last three months of 2022, the most since early 2021, preliminary data showed. It compares with market expectations of 0.2 percent and 0.3 percent in the previous period. Year-on-year, employment rose by 1.5 percent, following a 1.8 percent advance in the third quarter. The Euro strengthened to approach $1.08 in the second half of February, but remained below nine-month highs of $1.1 touched on February 1st, as investors continue to bet on a longer period of high interest rates and adjust their positions accordingly. The ECB is expected to raise key policy rates by another 50bps in March and to deliver a 25bps increase after that. The deposit rate is currently at 2.5%, but the peak rate is seen at 3.25%. Meanwhile, traders start betting interest rates in the US will need to stay high for a longer period of time. The Federal Reserve is seen delivering at least two more rate hikes. The peak rate is expected slightly higher at 5.00%-5.25% and no cuts in borrowing costs are expected this year.Wall Street Remains Under Pressure After US Retail Sales Surge 3%
The Dow lost almost 200 points on Wednesday, while the S&P 500 and Nasdaq 100 were down roughly 0.5% each, as investors digested a slew of economic data while reassessing the outlook for monetary policy. The Commerce Department report showed retail sales rebounded 3% in January, the sharpest one-month increase since March 2021, in the latest sign of consumer resilience and complicating the Federal Reserve’s task to cool the economy. The moves came after hawkish Fed speeches and hotter-than-expected inflation data dampened hopes of a pause in the central bank’s tightening cycle. On the corporate side, Airbnb jumped more than 10% after the home-sharing company posted a revenue outlook that beat expectations. Tesla rose 1% after Elon Musk said he intends to appoint a new CEO to Twitter. Retail sales in the US unexpectedly jumped 3% month-over-month in January of 2023, the biggest increase since March of 2021 and way above market forecasts of a 1.8% rise. It follows a 1.1% drop in December. Biggest rises were seen in sales at department stores (17.5%), food services and drinking places (7.2%), motor vehicles and parts (5.9%), furniture stores (4.4%), electronics and appliances (3.5%), miscellaneous stores (2.8%) and clothing (2.5%). On the other hand, sales at gasoline stations were flat.

Gold Hovers Near Six-Week Low
Gold bottomed below the $1,850/oz mark, a level not seen since early January, as signs of a resilient US economy paved the way for the Federal Reserve to hike interest rates. The Commerce Department report showed retail sales rebounded 3% in January, a sharper increase than expected, complicating the Federal Reserve’s task to cool the economy. At the same time, the annual inflation rate in the US slowed slightly to 6.4% in January from 6.5% in December, the lowest since October 2021 but above market expectations of 6.2%. The latest Fed commentary also showed that policymakers largely backed more rate increases. However, Philadelphia Fed Bank President Patrick Harker said the Fed was nearing the point where rates were restrictive enough.