Investors on the Frankfurt stock exchange merely took note of the stronger-than-expected fall in inflation rates for Germany and the Eurozone for November. On the one hand, this was probably because ten percent is still far too high and hardly sustainable for an economy like Germany. On the other hand, the DAX already anticipated much of this good news in its rally of over 22 percent in just eight weeks.
What followed was up and down, but at least it can be said that Fed Chairman Jerome Powell breathed new life into the markets. In his speech, the US Fed chief discussed the prospect of taking his foot off the gas when it came to interest rate hikes and hinted at a next rate hike in December of 50 basis points. This led to a price fireworks on Wall Street. The US technology stocks, which had been languishing, took a big gulp from the bottle, and the Nasdaq Index climbed back above 12,000 points.
More new jobs and stronger wage growth in the US
The next impulse, this time downwards, came at the end of the week in the form of labor market data from the USA. There is no sign of a slowdown far and wide. Newly created jobs of 263,000 were once again well above expectations, and hourly wages also rose by 5.1 percent in November, more than expected (4.6 percent).
The stock markets then went into reverse gear again. According to these figures, the hoped-for pause in interest rates will likely be postponed further in 2023. This will also probably break the DAX's eight-week winning streak today. Not only do the statistics suggest at least a break, but the market is now also in a somewhat worse situation from a technical point of view, as the series of new highs has been broken.
A healthy correction would bring the index back to the 200-day line, where the DAX can gather strength for a more relaxed start to the stock market year 2023.
China remains in focus because of COVID
Investors continue to look to China these days. The rampant coronavirus and the protests against the strict zero-covid policy of the government in Beijing last weekend are causing uncertainty. If China fails as the growth engine of the global economy, the recession in Europe and the US could be longer and deeper than the recently germinated hopes would have us believe.
Apple (NASDAQ:AAPL) is therefore also likely to face difficult times. The company has massive problems with the production of its products, above all, the iPhone. Due to the lockdowns in China, capacities cannot be fully utilized. According to initial estimates, about 20 million units are missing for sale.
As if that were not bad enough, the strongest sales period of the year is now approaching with the winter business. If the company does not get a grip on the problem in time, this could leave clear marks on the balance sheet. However, the loss of customer confidence maybe even more serious than unrealized sales. Many a customer could leave the Apple universe and switch to other manufacturers.
High dividends from German carmakers entice investors
One sector that is currently polarising like no other is the automotive industry. Most recently, the Porsche IPO showed how much interest investors have in German carmakers. And why not? Because not only are the figures good, but the dividends are also right. The three manufacturers, VW, BMW, and Mercedes, will pay out a combined dividend of 13.5 billion euros for 2022, a quarter of the total DAX payouts.
At the moment, however, the situation in China is putting a strain on the carmakers. The problems range from disrupted supply chains to plant closures. Sooner or later, all this will show up clearly in the companies' balance sheets and is currently holding back prices on the stock market. However, for long-term investors looking for dividends, this could be an excellent time to enter the market.
DAX - current supports and resistances:
Supports: 14,350/14,300 + 14,200/14,150 + 14,050/14,000
Resistances: 14,550/14,600 + 14,650/14,700 + 14,900/14,950