Feeders switch to safety mode

Dhe rally on Europe’s stock exchanges has run out of air. Investors are tempted to cash in on stock prices that have climbed towards old highs on Tuesday. “In view of the brilliant price rally in recent weeks, investors are now getting cold feet and understandably trying to silver their profits,” said analyst Timo Emden from the analyst company of the same name. “The fact that the renewed reset will not be used as a return in return this time could speak for a larger consolidation movement.”

The Dax lost two percent to 12,562 points and the Euro Stoxx 50 dropped 1.7 percent to 3307 points. More and more investors distrusted the recent recovery rally. After the outbreak of the corona pandemic, global equity markets collapsed by more than 30 percent within a few weeks from mid-February. In the meantime, they are flirting again with the record highs reached at the beginning of the year and again quoting around 40 percent above their March lows.

Concerns about a second wave of infection moved further and further away. But uncertainty about the actual state of the economy drove the buying mood away. Investors are now eagerly awaiting statements from the US Federal Reserve that are due on Wednesday. The Fed, like other central banks, has also opened its money gates to cushion the consequences of the severe recession. Most recently, she eased the terms of her loan program for small and medium-sized businesses on Monday.

Export figures showed on Tuesday how much the restrictions to contain the pandemic slowed down the economy. Because of the corona recession, German exports at key trading partners such as France and the USA have plummeted as never before. “There is little left of the export boom of the past ten years,” commented the chief economist at Bankhaus Lampe, Alexander Krüger.

The test is still to come

“The real test of the economy comes when government aid programs are scaled back in the coming months,” said Rupert Thompson, chief investor at Kingswood’s wealth management. Ailing industries are currently being supported with aid programs worth billions. France announced that it would help the aviation industry with a total of 15 billion euros.

Investors are using the strong price gains of the past few days in particular to take profits in bank and travel stocks. The European banking index fell by around 4.5 percent. It had grown a fifth in the previous five trading days. In the Dax, Deutsche Bank stocks ended at a discount of around five percent; in the MDax, Deutsche Pfandbriefbank shares temporarily fell by up to 11.7 percent.

Volkswagen shares were down by up to 4.8 percent after violent turbulence on the executive floor. After internal disputes, CEO Herbert Diess has to give up the management of the main brand VW. Ralf Brandstätter, who is already in charge of the brand’s operational business, is at the top.

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