Nervous mood on the stock markets: the Dax slips below 11,000 points.(Photo: © Deutsche Börse Group)
Thursday 6 December 2018
The stock market crisis continues: while the main index of the Frankfurt Stock Exchange falls, one brand breaks after the other. Fears of a slowdown in the United States are not just a matter for car manufacturers.
Dark red warning signs snatch investors from everyday life in the German stock market: the leading Dax index continues to expand its price losses. After a weak start at 11,053 points, the most important German stock market barometer dropped sharply during the morning, surpassing 11,000 and 10,900 points.
Several times in succession, the DAX scored new daily lows – the most recent trading margin was 10,936.86 points, well below the minimum of the previous year. On the eve of the Dax it had gone at a relatively moderate 1.2 percent discount to 11,200 points on the market. Currently, the Dax has listed just under 2.8 percent less at 10.887 points – a good 312 points below its eve level.
"The Dax is sold out"
There are no signs of a change in sentiment: The Dax, with its 30 heavyweights on the German stock market, moves almost completely in the deep. In the analysis of prices from the beginning of the year, the Dax is now trading a little less than 13.3% in red. Only in the late morning the stabilization at about 10,960 points showed.
Among the biggest losers of the benchmark index are the Daimler shares, which fell 3.2 percent to a new five-year low of € 48.06. At the top of the list are titles like Infineon, Thyssenkrupp and Covestro. Here, price losses are between 3.2 and slightly less than 3.9 percent. The shares of the much acclaimed Dax start Wirecard sometimes more than 5%. Only the real estate company Vonovia is still able to keep up slightly in the morning.
"The Dax is sold off, including heavyweights, the cars" synthesized a dealer the situation together. The shares of Volkswagen and BMW each produce around 2.4%. Sales came "almost exclusively from machines and through stops", that is to say through automatic negotiation mechanisms and pre-set marks.
Comparison with China?
Experts see the arrest of Huawei's chief financial officer, Meng Wanzhou, in Canada as the reason for the new uncertainty in the buying and selling of shares. According to a media report, the Chinese manufacturer of network equipment and smartphones has been accused of violating the United States sanctions imposed on Iran. You must expect extradition to the United States. The arrest of the Chinese top manager had already caused quite a stir in the trade in Far East shares.
The United States and China have agreed for 90 months a breathing space in the conflict over tariffs for months in the margins of the G20 summit in Argentina. The arrest of the Huawei Finance Chief and a possible extradition to the United States could be misunderstood by the Beijing leadership and will cause all the Buenos Aires agreements to lapse, said market analyst Jochen Stanzl of the CMC intermediary. Markets. Even clear signs of rapprochement from China could not stem the fears of a clash between the two strongest economic powers in the world.
VDax measures increase nervousness
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Added to this are the economic concerns that are boiling the day before. Regarding the development of the interest rate in The sovereigns of the United States of different timelines had talked with observers of clear negative signals. The stimulus was triggered by the creation of a "reverse yield curve" in which short-term bonds yield higher returns than long-term bonds.
Behind these developments are the economic evaluations of investors over different time periods: if short-term returns are higher than the returns of cross-country skiers, this in the past usually indicated a slowdown in the economy. "Since the second world war, the US yield curve is reversed eight times and each time followed by a recession," warned analyst Jochen Stanzl of the online broker CMC Markets. An economic collapse in the United States should quickly hit the German economy through exports, it is fear.
The current price losses for the shares are not limited to the Frankfurt trade. The Eurostoxx50 has a good 2.2%. The VDax, which is known as the "barometer of fear" and measures investors' nervousness, has recently increased by just under ten percent to 21.89 points. That was the highest level in three weeks. The European volatility index VStoxx earned 13.5% at 21.67.