FRANKFURT (DEUTSCHE-BOERSE AG) – May 25, 2022 FRANKFURT. Despite the continued bad news for the stock markets, the DAX is doing surprisingly well. So far, there has been no sign of panic.
Now, it’s not at all that the worst fears of stockbrokers in the last trading days have been eliminated. Because the greatest perceived risks (see the Bank of America survey in May) – too hawkish behavior of central banks, fear of a global recession and discussion about inflation – still dominate the financial media. Not to mention a recent sales and earnings warning from Snap, Snapchat’s parent company for photos. And in the United States, there are increasing signs that consumers there – a key driver of the US economy – may soon act more cautiously.
From this point of view, local exchanges in particular have been doing quite well, with larger sell-off waves so far fought off time and time again, so that the DAX only lost 1.3 percent in value in its weekly comparison. At time of the survey, the stock barometer was slightly above the middle of its trading range of 3.9 percent from last Wednesday. People in many places seem to get used to the bad news.
No sign of panic
There is also no sign of panic among the medium-term institutional investors we surveyed. On the contrary: our sentiment index Börse Frankfurt remained unchanged from the previous week at +13. Investors were not idle, however, as the polarization between bulls and bears has intensified significantly. Both groups gained 7 percentage points compared to the previous week. There are indications that the new optimists used the pullback on the DAX during the reporting period to buy the weakness, while the new pessimists could at best use the current monthly high (above 14,200 DAX points) for new short exposures. As a result, the group of neutral investors shrank by over 40 percent.
However, there has been a slight shift towards pessimism among retail investors. Because the Frankfurt Stock Exchange Sentiment Index of this panel had dropped again – this time by 7 points to a new level of -9, as in total there was mostly a manageable hike from bull camp to bear camp. In any case, unlike the institutional counterparts, there was no sign of wanting to buy.
In search of consolidation
Of course, today’s survey has further widened the disparity in sentiment between private and institutional investors. In any case, the latter do not seem to expect stock market activity to calm down – almost a fifth of those polled expect the DAX to expand sideways in the next four weeks. However, the recent engagement is probably not about anticipating a larger trend, but rather a broad, albeit potentially volatile, consolidation zone that can fluctuate between 13,600 / 13,650 and 14,250 / 14,300 DAX points.
Overall, however, the DAX is burdened with a slight optimism of institutional investors in general. In particular, the underside of said zone is less protected than its upper limit. On the other hand, the main impetus for the DAX will not come from domestic investors at the moment, but rather from long-term capital flows (also from abroad), which could change the DAX balance sheet, which now seems fragile. to his detriment.
May 25, 2022, © Goldberg & Goldberg for boerse-frankfurt.de
(Deutsche Börse AG is solely responsible for the content of the column. The articles do not constitute an invitation to buy or sell any securities or other assets.)