The German DAX rose to start the day, but has since drifted a bit lower in afternoon trading. The market now focuses on a big figure below.
DAX
The German DAX initially did rally a bit during the trading session on Wednesday but has turned around to show signs of weakness again. The DAX is down slightly as it continues to drift towards the €26,000 level.
That being said, the overnight trading was rather ugly, with the KOSPI in South Korea losing 5.4% and the Nikkei in Japan dropping 3%. The DAX, though, for the most part, has ignored it. There's some negativity, but it has to do more with a handful of major stocks. For example, chips and industrials have stumbled a bit: Infineon is down roughly 7%, with Siemens Energy down about 5%, Airbus is down 2%, and the defensive stocks out there seem to be getting the bid. SAP is up just a bit over 2%, with Bayer up just under 2%. Deutsche Telekom is also doing fairly well, up 1.7%.
Macro Bond Yield Pressures and Sector Divergence
Energy names are supported by elevated crude at the moment, which does make a certain amount of sense, but that also could be a problem for other industries.
Bonds are part of the play here too, with the Bund 10-year at 3.22%, the highest since May of 2011, and the US 30-year is above 5.3%.
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That being said, this is a market that is approaching a significant round figure in the form of €26,000, and traders will be watching this very closely. The recent price action has been somewhat lackluster, but it's a nice, steady uptrend when you look at it from a longer-term standpoint. And therefore, this may just end up being a healthy correction before it's all said and done.
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