The Robomarkets Weekly Review and Outlook – DAX Remains at the 16,000 Mark – Earning Season So Far Rather Mixed

Jürgen Molnar, Capital Market Strategist RoboMarkets

21 April 2023

The latter, in combination with a very weak leading indicator for the US economy, again heightened recession concerns on the stock market. However, there is not much investors can really do right these days. For on the other hand, strong economic data are dragging out the monetary tightening course of the central banks and also scaring off equity buyers. This describes exactly the tension in which the stock market currently finds itself.

Professionals Bet on the Correction

And since neither side can really assert itself, what remains in the end is a sideways trend, which in the case of the DAX means almost standstill. Short of the 16,000 mark, both buying and selling were limited last week – a situation that might not change much until the beginning of May and the next meeting of the US Federal Reserve. If professional market participants have their way, this could be the famous calm before the storm. They are currently holding fewer shares than at any time in the last 20 years.

Not only have the professionals gone out of the market, but bets on falling prices have increased significantly in recent weeks. With over one trillion US dollars, these investors are betting on a correction, which, however, does not want to come yet. If the market turns, however, the position could lead to a self-fulfilling prophecy and a massive sell-off. So besides all the euphoria near the all-time high in the DAX, there is plenty of caution to be exercised.

Tesla Spoils the Appetite for Car Shares

Tesla‘s disappointing figures have spoiled investors’ taste for car shares for the time being. Although the e-car pioneer increased its sales significantly by 24 percent, this was only possible due to high price discounts. As a result, profits fell by the same amount. The reason for the significant price cuts on the models is the under-utilisation of new factories. It is an alarming sign for investors who do not honour the sales they have bought. For Tesla itself, the next period will be a seminal one.

High inflation, which makes customers reluctant to buy, is likely to make it much harder for the e-car maker to compete with the classic combustion car. Tesla shares themselves fell by ten per cent, and German carmakers such as VW and BMW also recorded significant markdowns. Concerns about a shrinking car market could continue to reverberate on the stock market for a few more days. At the beginning of May, the domestic carmakers report, Tesla may have made this presentation of figures a lot more exciting with its news.

Netflix Fights for Every New Subscriber

Netflix was particularly disappointing in terms of the number of newly acquired subscribers in the first three months. This is certainly one reason why the streaming provider remains cautious about its outlook. In addition, the company plans to make it more difficult to share passwords in the coming months and to charge free users more. Last but not least, the competition is catching up more and more, which makes the environment increasingly difficult for the former top dog. The share was able to recover from the slump of more than ten per cent after the figures, but the overall trend remains downwards for the time being.

Reporting Season in Full Swing

In addition to a few important economic data at the end of the week, the reporting season is likely to continue to determine the direction of the stock market. It will be exciting on Monday, when Credit Suisse, which was saved from bankruptcy in an emergency takeover, presents its figures. Three days earlier than planned and thus one day before the presentation of the balance sheet of the rescuer UBS.

CS will probably not have anything good to report, but it remains to be seen whether it will be so bad that it will cause the new UBS boss even more headaches on Tuesday than it probably already is. From the US big tech sector, Google parent Alphabet and software giant Microsoft will report their figures on Tuesday, followed by Amazon and Intel on Thursday. Let’s hope that the rather unsuccessful start with Netflix and Tesla does not find too many imitators.

DAX – Current Supports and Resistances

Supports: 15,700/15,650 + 15,550/15,500 + 15,350/15,300

Resistances: 15,800/15,850 + 15,900/15,950 + 16,000/16,050

This article is from RoboMarkets.