Frankfurt Stock Exchange
The DAX has fallen below the Fed since July
The DAX is the most important stock index in Germany.
Photo: Fredrik von Ericsson/dpa
Updated 9/21/2022 10:13 am
Frankfurt am Main. The DEX fell to a three-month low on Wednesday before anxiously awaiting a rate decision from the US Federal Reserve. The fact that Russia has ordered a partial mobilization of its own armed forces also caused uncertainty. Important German indices initially fell by more than one percentage point. It hit its lowest level since July at 12,520.
However, the DAX was able to put a loss of 12,610.68 points into perspective, a minus of 0.47 percent. He was able to work his way back just above the 12,600 mark, which has recently supported him several times. Eurostocks largely followed the move lower. Although the MDax fell only 0.16 percent to 23,721.41, it is at its lowest level since 2020 for several days.
According to CMC Markets expert Jochen Stanzel, the DAX is just below the 12,400 mark, close to an annual low. If this mark breaks, it doesn’t paint a good picture for the leading index. “This includes a number of sell orders from long-term investors who want to break the record – and from those who entered the market at short notice but have not yet made it into the profit zone,” says Stanzel.
The Fed is expected to hike rates again mid-week to fight high inflation. Most experts assume that the central bankers will raise the key interest rate by 0.75 percentage points for the third time in a row. However, some market participants expect more. Traders put the proportion expecting a full percentage point at one-fifth.
Meanwhile, about seven months into the war, Russia ordered a partial mobilization of its own forces. According to Defense Minister Sergei Shoigu, 300,000 reservists are to be mobilized for the fight against Ukraine. The beneficiaries of such news were once again the shares of German armaments companies: Rheinmetall and Heinsoldt increased by up to 8.2 percent.
Investors also focused on the topic of the energy crisis and its price-increasing effect. Germany’s largest gas importer, Unipar, is now being nationalized: as it became clear the day before, the federal government wants to buy all the shares of the previous majority owner, Fortum, for 1.70 euros. A capital increase of 8 billion euros is also planned at this price. The federal government would then hold around 98.5 percent of the shares in Unipar.
The move would result in a reduction in Unipar’s existing shareholders, something market participants already feared. Stocks went out of business the day before at EUR 4.18 – and the price fell amid great volatility. Most recently, the papers closed at EUR 3.39 with a discount of 19 percent. On the other hand, investors are very relieved in the case of Fortum, as the price jump of 15 percent shows.
Deutsche Post shares were the biggest DAX losers at 2.6 percent. Goldman Sachs analyst Patrick Creuset lowered his previous buy rating on expectations that logistics sector profitability would peak in the third quarter. He now anticipates a multi-year down cycle and a new normal that could be worse than before the 2019 pandemic.
© dpa-infocom, dpa:220921-99-842496/3 (dpa)