Market report: DAX seems to be recovering

market report

Status: 07/14/2022 09:35 a.m

In view of the mass of problems, the DAX is in relatively robust condition in early trading: the US inflation data seems to have been digested to a large extent, now the focus is on the reporting season.

The DAX started trading at a discount of 0.2 percent to 12,730 points. Yesterday, given the immensely high US inflation, it temporarily dropped to 12,625 points, but was able to contain the losses. At the close of trading, the minus amounted to 1.2 percent to 12,756 points.

Recession worries are increasing

In the US, consumer prices rose 9.1 percent in June, the highest in over 40 years. This puts the US Federal Reserve under pressure to tighten its monetary policy. However, further increases in interest rates could stall the economy and also reduce the attractiveness of equities compared to fixed-income securities such as bonds.

Market observers at Helaba write in their daily comment that the mood among market participants fluctuates between fears of inflation and interest rates and worries of a recession.

Update economy from 07/14/2022

Klaus-Rainer Jackisch, HR, 14.7.2022 09:55 a.m

Reporting season comes into focus

Nevertheless, the stock market is holding up pretty well, and investors are hoping that the current news situation can’t really get any worse, comments Jochen Stanzl, chief market analyst at CMC Markets. “Perhaps the forthcoming reporting season can also alleviate the fear of an earnings recession a little.”

Because today the banks JPMorgan and Morgan Stanley are starting the US accounting season. Investors will be scrutinizing the balance sheets for any signs of a recession. Bank transactions are seen as good indicators of the state of the economy as a whole.

Wall Street in reverse

The US targets are meager due to inflation concerns: The Dow Jones lost 0.7 percent to 30,773 points. The tech-heavy Nasdaq fell 0.2 percent to 11,248 points and the S&P 500 fell 0.4 percent to 3,802 points.

“Right now, the Fed isn’t your friend from an investor perspective, and until that changes, it’s going to be tough for stocks to gain ground,” said Ameriprise Financial market strategist Anthony Saglimbene, alluding to investors’ interest rate concerns. In addition, the US Federal Reserve Banker Raphael Bostic does not rule out a rate hike by a full percentage point after the high US inflation figures. The next Fed rate meeting is on July 26th and 27th.

According to an analysis by the CME Group, 70 percent of futures traders are now assuming a rate hike of 1 percent. “They need to raise rates quickly and in big strides,” Independent Advisor Alliance’s Chris Zaccarelli said of the Fed.

Inflation leaves Asia cold

The Asian markets remained rather unimpressed by the US inflation data today: The Nikkei index rose by 0.6 percent to 26,651 points. Hopes of better business for export-oriented companies due to the weak yen gave the Japanese stock market a boost.

The Shanghai Stock Exchange was down 0.2 percent at 3279 points. There, falls in real estate and financial stocks offset a rally in technology stocks.

Euro exchange rate stabilizes

The euro hardly moved in the morning and held just above parity with the US dollar. Most recently, the common currency cost 1.0024 US dollars and thus about as much as the previous evening.

On Wednesday, the euro was temporarily worth less than a dollar for the first time since 2002 after unexpectedly high inflation was reported in the US for June. This had sparked speculation that the US Federal Reserve would take decisive interest rate steps to combat the sharp rise in inflation. The low reached $0.9998.

Oil price increases slightly

Oil prices continue to stabilize after sharp losses on Tuesday. A barrel (159 liters) of North Sea Brent cost 100.05 US dollars in early trading, 0.48 cents more than yesterday. The price of a barrel of the US West Texas Intermediate (WTI) variety rose by 28 cents to $96.58.

The two types of oil thus cost significantly less than in mid-June, when a barrel of Brent oil cost around $125. On Tuesday alone, oil prices fell by up to eight percent. The decisive factor was the fear of an economic downturn as a result of an impending energy crisis in Europe.

Deutsche Telekom wants to sell a majority stake in its radio tower division

Deutsche Telekom wants to sell the majority of its radio tower division. The group announced that it would sell 51 percent of its previous business to Brookfield Asset Management from Canada and Digital Bridge from the USA. Telekom wants to keep 49 percent. As part of the transaction, the Funkturm business is reportedly valued at €17.5 billion excluding debt and cash. It’s about 40,000 cell phone sites in Germany and Austria. Telekom remains on board as a tenant – so there will also be magenta antennas at the locations in the future.

High costs at the network supplier Ericsson

At the Swedish network supplier Ericsson, the operating result (EBIT) adjusted for conversion costs rose by a good quarter to 7.4 billion Swedish crowns (697 million euros) compared to the previous year. However, analysts had hoped for more. Strong demand for 5G products in North America could not offset higher costs and lower licensing income. Quarterly sales climbed 14 percent to SEK 62.5 billion. The withdrawal from the Russian business as a result of the Ukraine war had a negative impact of around 1.2 billion crowns. The bottom line is that profits rose by almost a fifth to 4.7 billion crowns.

Swatch increases profit

The Swiss watch manufacturer Swatch increased its profit by 18.5 percent to CHF 320 million in the first half of the year. Net sales grew currency-adjusted by 7.4 percent to 3.61 billion francs, despite partially closed shops in the important Chinese market. Swatch reiterated its forecast and continues to anticipate double-digit sales growth for the full year, excluding currency effects.

Novavax vaccine approved in the US

The US Food and Drug Administration FDA has approved the Corona vaccine Novavax for adults. Recommendations for administering the vaccine are expected next week. The US government has already purchased 3.2 million doses of the vaccine. According to Novavax boss Stanley Erck, the vaccinations can start in July. Novavax is one of the more traditional protein-based vaccines and is already approved in Europe and other countries.

Panasonic builds EV battery plant in Kansas

Tesla supplier Panasonic Energy is building a new battery plant in the US state of Kansas in view of the high demand for electric cars. According to the state, up to 4,000 jobs will be created at the new De Soto site through an investment of around four billion dollars. Panasonic Energy wants to increase the range of the batteries through higher energy density and thus make electric cars more efficient. The subsidiary of the Japanese electronics group already operates a factory in Nevada that supplies Tesla.

Hugo Boss increases profit and sales forecast

After strong growth in the second quarter, the Hugo Boss fashion group sees itself on record course. Hugo Boss now forecasts that it will be able to increase group sales by between 20 and 25 percent to a record level of 3.3 to 3.5 billion euros. The previous forecast provided for an increase of between ten and 15 percent to a level of 3.1 to 3.2 billion euros. An increase of between 25 and 35 percent to 285 to 310 million euros is expected for the operating result (EBIT) (previous forecast: increase of between 10 and 25 percent to 250 to 285 million euros).

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