German Stocks Open Lower, Euro Strengthens Against Dollar
The German Dax index opened lower on Wednesday, with a slight decline in trading, according to early market data. By 9:30 am, the index had dropped 0.2 percent to around 23,985 points, with Infineon, Commerzbank and Deutsche Bank leading the gains, while Symrise, Sartorius and Zalando lagged behind.
From a technical perspective, the Dax has now entered an overbought zone, according to Thomas Altmann of QC Partners. “The Relative Strength Index for the past 14 trading days stands at 71. Values above 70 are considered overbought” he said. The index reached an all-time high for the 27th time this year on Tuesday, leaving just three more records to be broken to reach the 30 highs of the first half of 2024, which would be the fourth best in the Dax’s history.
However, the analyst noted that the valuation of the market is still increasing. The expected price-to-earnings ratio for the next 12 months is now 16.8, significantly higher than the 15-year average of 13.4. Looking two years ahead, the expected price-to-earnings ratio is 14.8, compared to an average of 12.0 over the past five years, Altmann said.
Meanwhile, the euro strengthened against the US dollar on Wednesday morning, with one euro buying 1.1326 US dollars and one US dollar purchasing 0.8829 euros.
Oil prices also rose, with a barrel of Brent crude trading at 66.02 US dollars at 9 am German time, a 1 percent increase from the previous day’s close.