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Stock trader in Frankfurt: The Dax accelerates its price slide

Photo: A3602 Frank Rumpenhorst/ dpa

After reaching a record high 12 days ago, the German stock market has accelerated its decline. Weak guidance from Asian stock markets and disappointing Chinese economic data weighed on the economy. On Wall Street, trading also opened with losses in the afternoon, and the Dax then significantly extended its losses.

In terms of charts, the picture for the Dax now clouded over with the slide below the previous week's low, especially since the Dax also tore the 50-day line for the medium-term trend. Shortly before the close of Xetra, the index recorded a discount of 1.6 percent to 15,656 points, falling back to the price level of early April. There are also signs of a negative balance for the month of May, in which the Dax had looked very good at times. The EuroStoxx 50 also extended losses on Wednesday. Most recently, the Eurozone benchmark index was 1.8 percent lower at 4214 points.

The US debt issue continues to be in focus shortly before the end of the month. US President Joe Biden and Kevin McCarthy, the Republican leader in the House of Representatives, had agreed on a deal over the weekend. The corresponding bill has now cleared a hurdle in the U.S. House of Representatives. According to media reports, the responsible committee cleared the way for a vote on Tuesday evening. The bill is now expected to be debated this Wednesday in the House of Representatives, followed by a vote. McCarthy is also facing resistance from radical members of his party.

Meanwhile, China's economic recovery is slowing, with leading indicators coming in worse than expected in May. The official manufacturing purchasing managers' index (PMI) declined for the second month in a row and remains below the 50-point threshold, signaling a contraction. Although the index for the service sector remained in expansionary territory, it also fell. Both sentiment barometers fell short of expectations. The China data weighed on BASF, among others, which was one of the weakest stocks in the Dax with a minus of 1.5 percent, together with Continental and Vonovia.

The reasons for the slowdown in the second-largest economy are manifold: export growth has deteriorated. The recovery of the ailing real estate market is weaker. The government has also slowed down infrastructure spending. Companies are suffering from declining profits and growing political tensions with the US and its allies.

Significant drop in import prices in Germany

Meanwhile, import prices in Germany fell by 7.0 percent in April compared to the same month last year. This is the sharpest decline since October 2009. In March, import prices fell for the first time in a long time, after they had risen by more than 30 percent at times last summer.

Vonovia: Hedge fund Elliot pushes for special audit

The real estate group Deutsche Wohnen and its majority shareholder Vonovia are under pressure from investors because of a loan. The proxy advisor ISS, together with the hedge fund Elliott, is pushing for a special audit of a loan of up to two billion euros that Deutsche Wohnen had granted to its major shareholder. The aim is to investigate whether the takeover by Vonovia was a reason for granting the loan. However, it is not to be expected that Deutsche Wohnen's shareholders will approve the special audit at its Annual General Meeting, as Vonovia holds almost 90 percent of the shares. The shares of Deutsche Wohnen fell by 1.7 percent, while those of Vonovia recently lost 3.6 percent.

U.S. stock market gets off to a weak start

The Dow Jones Industrial initially extended its moderate previous day's losses somewhat on Wednesday. According to stock market analysts, disappointing economic data from China are causing uncertainty. The economic recovery in the world's second-largest economy has slowed.

Shortly after the start of trading, the Dow Jones was 0.5 percent lower at 32,869 points. The US benchmark index had suffered the day before from the ongoing residual uncertainty surrounding the debt dispute in the USA.

Slight price slide in Asia

Asian stock markets slipped back into the red on Wednesday. Weak Chinese economic data fueled doubts about the recovery of the world's second-largest economy after the coronavirus pandemic. Chinese industry contracted faster than expected in May due to weak demand. "There have been fears that China's economic comeback could be so strong that it would complicate the fight of developed market central banks against inflation," said Carol Kong of the Commonwealth Bank of Australia. "But now it looks like those expectations are completely exaggerated."

Bitcoin under pressure

The digital currency Bitcoin has recently come under slight pressure. On the Coinmarketcap platform, one Bitcoin was trading at $27,150, 2.3 percent lower than the day before. In November 2022, the currency had plummeted from over $21,000 to around $16,000 amid the collapse of crypto exchange FTX. A year earlier, Bitcoin reached a record high of $69,000.

Oil prices decline

Oil prices slightly extended their previous day's losses in early trading on Wednesday. In the morning, a barrel (159 liters) of North Sea Brent crude for delivery in July cost $73.35. That was 19 cents less than the day before. The price of a barrel of U.S. WTI fell 35 cents to $69.11.

Weak economic data from China made themselves felt. On the financial and commodity markets, all eyes continue to turn towards the United States. The recently reached compromise in the debt dispute is to be debated on Wednesday in the House of Representatives and then voted on. Oil prices had been weighed down by the escalation of the conflict over the legal debt limit.

With news agencies