Market Report: Fears of inflation are paralyzing the stock markets


market report

Status: 06/29/2022 12:28 p.m

At noon, the 13,000 point mark in the DAX comes dangerously close again. Share investors prefer to take cover in view of persistently high inflation rates and weak economic prospects.

With only 13,030 points left, the DAX is trying to limit its price losses at noon. This corresponds to a minus of around 1.5 percent compared to yesterday’s closing level. The mild upward trend on the stock market at the start of the week has already ended. In the meantime, the round one-thousand mark is wobbling again.

Overseas exchanges with matte template

Weak US consumer confidence data for June sent US stock markets lower in the evening. The standard value index Dow Jones closed 1.6 percent lower at 30,946 points. The US futures are also pointing to a weak start to trading this afternoon. In Japan, the Nikkei index lost 0.9 percent in the morning to 26,805 points. Fears of inflation and recession are also spreading in Asia.

Inflation as the main topic on the stock exchange

The fear of rising inflation rates is once again driving investors. The official inflation rates for Germany will be reported in the afternoon. Initial data from several federal states already suggest that inflation will remain high. Accordingly, consumer spending in Germany is likely to continue to fall. “This means that a mainstay of economic growth is breaking away, instead the signs of a recession are increasing,” says Jürgen Molnar from the broker RoboMarkets.

Bad climate in euro companies

The mood in the euro zone economy did not deteriorate as much as expected in June. The business climate barometer fell 1.0 to 104.0 points, according to European Commission data released today. Experts polled by Reuters had expected a slightly sharper decline. Sentiment deteriorated in all five major economies of the monetary union. High inflation, material shortages and uncertainty about the progress of the Russian war against Ukraine are currently the biggest mood killers.

Euro at times under 1.05 dollars

At noon, the European common currency continued to hover around the $1.05 mark. In the meantime, the euro had slipped to $1.0480 and is currently trading at $1.0513. Concerns about the economy are also causing oil prices to fall again after four trading days with gains. A barrel of North Sea Brent currently costs $114, while the US brand WTI has dropped to $111 per barrel. An ounce of gold is trading at $1815.

Delivery services under pressure

In the DAX, the HelloFresh share slipped significantly into the red, and Delivery Hero in the MDAX also recorded significant losses. Shares are reacting to a plunge in shares of competitor Just Eat Takeaway following a sell recommendation from Berenberg Bank. In Amsterdam, Just Eat Takeaway dropped nearly 17 percent. A recession in Europe and the US next year is likely to put pressure on consumer spending, argued Berenberg analyst Sarah Simon. However, it is not yet possible to foresee how much consumers will then tighten their belts when ordering food.

VW wants to cut costs

In view of the high order backlog, the Volkswagen Group is optimistic about the second half of the year. In particular, the demand for well-equipped vehicles is still high, said CFO Arno Antlitz of the Reuters news agency. With rising interest rates and a possible economic slowdown, however, competition will increase significantly. Volkswagen must therefore focus more on cost reductions again, also in order to be able to compensate for price increases for raw materials, among other things.

BMW boss thinks the end of the combustion engine is wrong

After the EU decision to only allow climate-neutral cars in the community from 2035, BMW CEO Oliver Zipse was critical. “To put everything on one card these days is an industrial policy mistake,” said Zipse yesterday in Munich. Whether the necessary charging infrastructure for e-cars can be created by 2035 is an open question. How Europe wants to ensure access to the crucial raw materials is unclear. New dependencies threatened here.

Hornbach in the do-it-yourself trend

The Hornbach DIY chain is benefiting from the ongoing trend towards DIY. In the first quarter of the 2022/23 financial year, sales exceeded the previous year’s record figure with an increase of 8.1 percent to 1.8 billion euros. “We are convinced that consumers’ focus on their immediate environment and their home is a longer-term trend that will continue,” said CEO Erich Harsch. However, it is not known how persistent inflation and geopolitical uncertainty will affect consumer behavior in the coming months.

H&M surprises with high profit

Shares in the fashion group Hennes & Mauritz (H&M) are up by up to five percent today. H&M earned more than expected in the second quarter of the 2021/22 financial year. In the three months to the end of May, pre-tax profit rose by a third to 4.8 billion Swedish crowns (around 450 million euros). As already known, sales increased by 17 percent to 54.5 billion crowns. There are also first signs that the recently tense situation in the supply chain is gradually improving, the group said. One concern, however, is high inflation, which could result in consumers spending less on clothing.

Searches in Germany at Hyundai

Searches due to diesel investigations at Hyundai and its subsidiary Kia are weighing on the shares of the two car manufacturers, which are each falling by around six percent. The fear of an expansion of the investigation and possible compensation payments is circulating on the market. Yesterday, according to the Frankfurt public prosecutor’s office, investigators searched buildings in Germany and Luxembourg because the two South Korean car manufacturers are said to have put more than 210,000 diesel vehicles with suspected illegal defeat devices on the road.

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