Markets

Investors are switching back to crisis mode

Dhe international equity markets lost on Tuesday as investors’ fear of the corona crisis and geopolitical tensions have returned. The German stock index Dax had a positive start to the week, but then the pessimists gained the upper hand. By Tuesday afternoon, the Dax was down 1.4 percent to around 12,615 points. The broad F.A.Z.index also fell by almost 1.4 percent to 2218 points. The M-Dax of the medium-sized values ​​fell by almost 1.5 percent to 26,580 points. The Europe-wide Euro-Stoxx-50 even lost 1.6 percent to 3295 points.

The change in mood was triggered by the development on Wall Street, where investors took cover on Monday evening due to the closure of bars, museums or cinemas in the most populous US state of California. American indices lost early Tuesday trading – the S&P 500 by 0.3 percent and the Nasdaq by 1.3 percent.

In addition to the concerns of investors, the long-standing simmering tensions between America and China were added. It is now more than just tariffs and corporate sanctions, as evidenced by the fact that Washington officially rejected the People’s Republic’s claims in the South China Sea. This apparently fueled fear on the stock exchange that the conflict between the armed superpowers could escalate into a military confrontation. “This demonstrates Washington’s will to fight China on different fronts,” said Neil Wilson, chief analyst at online broker Markets.com.

In Asia, the major stock market indices also posted losses on Tuesday. In Japan, the Nikkei fell more than 1 percent to 22,566 points. The Hong Kong Hang Seng and the CSI 300 on the Shanghai Stock Exchange also lost more than 1 percent. The Chinese stock exchanges had celebrated an incomparable hype until recently.

Back to the facts

Shortly before, the strong optimism on the international stock exchanges had caused amazement among observers. “The prevailing opinion is that the prices have gone too far,” said portfolio manager Thomas Altmann from the investment advisor QC Partners. According to economist Thomas Gitzel, the euphoria seems to be over. “Now it’s time to get back to the facts,” said Gitzell, economist at Liechtenstein’s VP Bank, on the occasion of the monthly mood barometer published on Tuesday by the Mannheim Economic Research Institute ZEW. Among other things, the ZEW index tries to measure the economic mood of financial market players. In June, the optimism of the stock market was dampened, whereas there had been three increases in a row before. A gradual increase in gross domestic product is not expected by those surveyed by ZEW until the second half of the year and early 2021.


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To detailed view

At the end of last week, investors had boosted Tesla’s share price to new heights, making the company the most valuable automaker on the stock exchange ahead of Toyota. The already highly valued American tech companies such as Amazon, Apple, Microsoft or Google also experienced hype on the stock exchange. Their stocks are now suffering particularly from the profit taking on Wall Street. This was also felt by the German tech values ​​in the Dax. The manufacturer of enterprise software SAP lost 3.7 percent on Tuesday and the computer chip specialist Infineon even posted a price drop of more than 4 percent. Both stocks kept the Dax’s list of losers in the afternoon.

Bank loans at risk of default

By contrast, bank stocks were somewhat stable. The two major US banks JP Morgan and Citigroup reported Tuesday, despite growing provisions for bad debts, business figures that were apparently less disastrous than feared. This gave tailwind to Deutsche Bank and even Commerzbank, shaken by the withdrawal of its top management.

German government bonds as a safe haven have so far not been able to benefit from the downward movement of the stock markets. Instead, Bund prices fell initially on Tuesday, with the current yield rising from minus 0.48 to minus 0.45 percent. The price of the crisis currency gold rose last week for the first time since 2011 above the $ 1,800 troy ounce mark. In view of the growing uncertainty, analysts believe that the gold price could overshadow its all-time high of around $ 1900 within the next 12 months and climb to the $ 2000 mark.

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