Why are all stock prices falling

Dax : Why are share prices falling right now?

Is this the beginning of a major correction? The Dax has fallen by 5.96 percent since its all-time high of 13596 points just two weeks ago. On Friday alone it fell by 1.6 percent and broke the 13,000 point mark. The causes are manifold. On Friday, after disappointing business figures, the Deutsche Bank share fell by over 6 percent.

Another reason is the persistently strong euro, which has already made itself felt in the past few weeks. It traded just below $ 1.25 on Friday, close to its three-year high from last week. A strong euro is bad for the German export industry.

Another reason is the rising bond yields. When interest rates rise on bonds, they can become more attractive to investors than stock dividends. That hurts the share price. The yield on ten-year federal bonds climbed to 0.752 percent, the highest level since September 2015. The ten-year US government bond yielded 2.801 percent, a four-year high.

Decisive for the development

The latter value is considered to be decisive for the global markets. The interest rates on ten-year US Treasuries have broken through their almost 30-year downtrend in terms of charts. The first thing the author John Authers of the "Financial Times" drew attention to. It is therefore likely that interest rates will continue to rise. The US Federal Reserve has also given clear signals that the next rate hike is due in March and two more in the course of the year.

The ECB is also in the process of tightening the reins. The bond purchase program was cut in half at the beginning of the year, and it could end entirely in September. Similar signals are coming from the Japanese central bank. Numbers about a slowly increasing inflation in the US do the rest to fuel interest rate fantasies.

The next big question is: Are the current falling stock prices just an interim correction, or the beginning of a lengthy downtrend? Given the positive growth figures around the world, that seems unlikely. In addition, stocks in the USA are nowhere near as steep as in Germany. It is too early to fear a downward trend. os

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